REG - Nexteq PLC - Trading Update and Notice of Results

NexteqAnnouncement

17/01/2024 07:00

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RNS Number : 9092Z  Nexteq PLC  17 January 2024

The information contained within this announcement is deemed by the Company to
constitute inside information pursuant to Article 7 of EU Regulation 596/2014
as it forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 as amended.

17 January 2024

Nexteq plc

("Nexteq" or the "Group")

Trading Update and Notice of Results

Materially improved profitability and cash generation through focus on higher
value products

 

Nexteq (AIM: NXQ), a leading technology solutions provider to customers in
selected industrial markets, today provides an update on trading for the
financial year ended 31 December 2023 ("FY23").

 

Trading

 

The Group continues to make good strategic progress and the Board is pleased
to announce that it expects to report full year adjusted profit before tax
comfortably ahead of market expectations(1). As expected, gross margins
continued to improve in the second half of the year, with Densitron margins at
record levels driven by higher margin Broadcast products and effective supply
chain management. Quixant gross margins also continued their recovery and have
now returned to historic, pre-Covid, levels. The improved gross margins
coupled with effective management of operating expenses led to materially
improved profit margins in both Densitron and Quixant.

 

As announced in September with the 2023 interim results, the Group's order
book is normalising from the elevated levels of recent years as customers
reduce inventory levels because of easing of supply chain pressures, together
with wider economic uncertainty. This trend continued in the fourth quarter of
2023 and consequently the Board expects to report Group Revenues for the year
ended 31 December 2023 of $114.8m, 4% down against a record prior year
performance.

 

The Quixant business posted revenues of $69.4m, 6% down on the $74.1m recorded
in 2022, with year-on-year growth in board volumes offset by lower monitor
sales. The Densitron business delivered another robust performance with
revenues of $45.4m, broadly in line with the 2022 results.

 

Financial position

 

Net cash at 31 December 2023 increased substantially to $27.9m from $18.5m at
30 June 2023, with the increased profitability enhanced by improved cash from
operations and positive working capital movements as the Group reduced overall
stock levels.

 

Outlook

 

The Group made good strategic and operational progress in 2023, with profit
margins improving and cash generation returning to historic high levels. The
Board expects this improved margin to continue, with FY24 revenues at this
stage anticipated to be broadly in line with FY23 revenue levels,
notwithstanding persistent macroeconomic conditions.  The Group starts the
new financial year with a good order book at c.5 months of revenues, which is
consistent with historic levels and provides good visibility for FY24.

 

Notice of Results

The Group expects to report its full year results for 2023 on 13 March 2024.

Jon Jayal, Chief Executive Officer of Nexteq plc, commented: "The Group has
delivered a resilient revenue performance for the year against a backdrop of
macroeconomic uncertainty and fluctuating supply chain conditions. Through
this, we have remained focused on our customer proposition and long-term
growth strategy and delivered higher value products to the market, reflected
in enhanced gross margins and the return towards historic levels of
profitability and cash generation.

 

Whilst market conditions continue to lead to a more normalised purchasing
environment following exceptional demand in 2022, the quality of the pipeline
remains strong across the Group's focused industrial applications. The Group
continues to expand its market opportunity through value-accretive product
development and vertical diversification, underpinned by niche domain
expertise. The Board believes that this provides a strong platform to deliver
transformational earnings enhancement over the medium term, both organically
and through select M&A opportunities, backed by a very robust financial
position."

 

(1) The current range of forecasts for the year ended 31 December 2023 is
revenue of between $119.0m and $120.1m with a consensus of $119.6m and
consensus adjusted profit before tax of $12.7m.

 

 

 Nexteq plc                                              Tel: +44 (0)1223 892 696

 Jon Jayal, Chief Executive Officer

 Johan Olivier, Chief Financial Officer

 Nominated Adviser and Broker:                           Tel: +44 (0) 20 7220 0500

 Cavendish Capital Markets Ltd

 Matt Goode / Simon Hicks (Corporate Finance)

 Tim Redfern / Harriet Ward (ECM)

 Joint Broker:                                           Tel: +44 (0) 20 7523 8000

 Canaccord Genuity Limited

 Simon Bridges / Andrew Potts

 Financial PR:                                           Tel: +44 (0)20 3405 0205

 Alma Strategic Communications

 Hilary Buchanan / Kieran Breheny / Will Ellis Hancock

 

About Nexteq

Nexteq (AIM: NXQ) is a strategic technology solutions provider to customers in
selected industrial markets. Its innovative technology enables the
manufacturers of global electronic equipment to outsource the design,
development and supply of non-core aspects of their product offering. By
outsourcing elements of their technology stack to Nexteq, customers can focus
their product development effort on the most critical drivers of their
business' success.

Our solutions are delivered through a global sales team and leverage the
Group's electronic hardware, software, display and mechanical engineering
expertise. Our Taiwan operation is at the heart of Asian supply networks and
facilitates cost effective manufacturing and strategic supply chain
management.

The Group operates in seven countries and services over 500 customers across
50 countries.

Nexteq operates two distinct brands: Quixant, a specialised computer platforms
provider, and Densitron, leaders in human machine interface technology, each
with dedicated sales, account management and product innovation teams. Founded
in 2005, and later floating on the London Stock Exchange's AIM stock market as
Quixant plc, the Group rebranded to Nexteq in 2023.

Further information on Nexteq and its divisions can be found at
www.nexteqplc.com.

 

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