REG - discoverIE Group plc - Q3 Trading Update and Acquisition Completion

DiscoverieAnnouncement

25/01/2023 07:00

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RNS Number : 7401N  discoverIE Group plc  25 January 2023

For Release

7.00am, 25 January 2023

 

discoverIE Group plc

 

Q3 Trading Update and Acquisition Completion

 Good trading momentum and completion of Magnasphere acquisition further
strengthens US footprint

 

 

discoverIE Group plc (LSE: DSCV, "discoverIE" or the "Group"), a leading
international designer and manufacturer of customised electronics to industry,
today issues a trading update covering the three month period to 31 December
2022 ("Q3" or the "Period") and announces that the previously reported
acquisition of Magnasphere Corporation ("Magnasphere") has been completed.

 

 

Trading Update

 

The Group's positive trading momentum continued through Q3 with the strong
order book providing good visibility of demand.

 

Group sales in the Period were 11% ahead of last year((1)), of which 5% was
organic((2)), 3% from acquisitions and 3% from foreign exchange. Q3 sales
represented a new record high for the Group and were 2% ahead sequentially of
Q2. For the 9 months ended 31 December 2022, Group sales were 21% ahead of
last year, of which 11% was organic, 7% from acquisitions and 3% from foreign
exchange with 11% organic growth in both divisions.

The order book remains at a high level and ahead of last year. As previously
guided, it has begun to normalise from the record level reported at 30
September 2022 as it converts into sales and we expect this to continue
through the final quarter of the year.

 

Gross margins in the Period continued to be robust and the semiconductor
sourcing issues flagged last year, impacting two of our 21 businesses, are
continuing to improve.

 

Accordingly, the Group is on track to deliver full year underlying earnings
ahead of the Board's expectations.

 

The Group is well-funded with gearing at 31 December 2022 of 1.0x on a
proforma basis((3)). With the Group's target gearing range being 1.5x to 2.0x,
there remains good headroom for further acquisitions with a continuing
pipeline of acquisition opportunities.

 

With a clear strategy focused on long-term, high quality, structural and
sustainability-aligned growth markets across Europe, North America and Asia, a
diversified customer base, a strong order book and pipeline of acquisition
opportunities, the Group is well positioned to make further progress.

 

 

Acquisition of Magnasphere

 

The acquisition of Magnasphere, announced on 22 December 2022, has now
completed following the receipt of required vendor shareholder approvals with
the cash consideration of $22.0m (£18.5m) on a debt free, cash free basis,
before expenses, being funded from the Group's existing debt facilities. The
acquisition is expected to be immediately enhancing to Group underlying
earnings as well as accretive to the Group's underlying operating margin.

 

Magnasphere, founded in 2002, designs and manufactures high performance
magnetic sensors and switches for industrial electronic markets including
access control, data centres and specialist vehicles. The business is based in
Waukesha, Wisconsin, with manufacturing facilities in Goshen, Indiana and will
operate within the Group's Variohm cluster of specialist sensor businesses as
part of the Sensing & Connectivity division whilst retaining its distinct
brand identity.

 

 

For further information, please contact:

 

discoverIE Group plc
                                       01483 544 500

Nick Jefferies             Group Chief Executive

Simon Gibbins           Group Finance Director

Lili Huang                   Head of Investor Relations

 

Buchanan
020 7466 5000

Chris Lane, Toto Berger, Jack Devoy

discoverIE@buchanan.uk.com

Notes

1.     Growth rates refer to the comparable prior year period unless
stated.

 

2.   Organic growth for the Group compared with last year is calculated at
constant exchange rates ("CER") and is shown excluding the first 12 months of
acquisitions post completion (CPI in May 2021, Antenova in August 2021, Beacon
in September 2021 and CDT in June 2022). In calculating CER, the average
sterling rate of exchange weakened 2% against the Euro and 13% against the US
Dollar compared with the average rates for the same period last year, while
strengthening 3% on average against the three Nordic currencies.

 

3.   Gearing is defined as net debt divided by underlying EBITDA (excluding
IFRS 16, annualised for acquisitions). Proforma gearing includes the
acquisition of Magnasphere as if it had completed at 31 December 2022.

 

4.   This trading update is based upon unaudited management accounts and has
been prepared solely to provide additional information on trading to the
shareholders of discoverIE Group plc. It should not be relied on by any other
party for other purposes. Certain statements made in this update are forward
looking statements. Such statements have been made by the Directors in good
faith using information available up until the date that they approved this
update. Forward looking statements should be regarded with caution because of
the inherent uncertainties in economic trends and business risks.

 

Notes to Editors:

 

About discoverIE Group plc

 

discoverIE Group plc is an international group of businesses that designs and
manufactures innovative electronic components for industrial applications.

 

The Group provides application-specific components to original equipment
manufacturers ("OEMs") internationally through its two divisions, Magnetics
& Controls, and Sensing & Connectivity. By designing components that
meet customers' unique requirements, which are then manufactured and supplied
throughout the life of their production, a high level of repeating revenue is
generated with long term customer relationships.

 

With a focus on sustainable key markets driven by structural growth and
increasing electronic content, namely renewable energy, medical,
electrification of transportation and industrial automation &
connectivity, the Group aims to achieve organic growth that is well ahead of
GDP and to supplement that with complementary acquisitions. The Group has an
ongoing commitment to reducing the impact of its operations on the environment
and with its key markets aligned with a sustainable future, MSCI has awarded
the Group an ESG "A" rating.

 

The Group employs c.5,000 people across 20 countries with its principal
operating units located in Continental Europe, the UK, China, Sri Lanka, India
and North America.

 

discoverIE is listed on the Main Market of the London Stock Exchange and is a
member of the FTSE250, classified within the Electrical Components and
Equipment subsector.

 

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