REG - Velocity Composites - Trading Update & Notice of Results

Velocity CompositesAnnouncement

12/12/2024 07:00

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RNS Number : 7689P  Velocity Composites PLC  12 December 2024

12 December 2024

VELOCITY COMPOSITES PLC

("Velocity", the "Company", the "Group")

 

Trading Update & Notice of Results

 

Velocity Composites plc (AIM: VEL), the leading supplier of composite material
kits to aerospace, is pleased to announce its trading update for the 12 months
ended 31 October 2024 ("FY24"). The preliminary figures set out below are
subject to final audit. The Company expects to publish its FY24 results on 29
January 2025.

 

Highlights:

·    Revenue was up 40% to £23.0m (FY23: £16.4m), driven by growing US
sales

·    A positive adjusted EBITDA* of £0.4m, the first time since the
Covid-19 pandemic (FY23: adjusted EBITDA loss £(1.6m)

·    Maintained a healthy cash and liquidity position with cash-inflows
from operating activities of £0.4m (FY23: outflows of £1.8m)

·    The Company anticipates further growth in FY25 and beyond, as higher
monthly production rates are expected in the global aerospace industry

 

At £23.0m, revenue was slightly ahead of current market forecasts, driven by
increased sales in the US. Sales in the US quadrupled to £7.9m (FY23: £2.0m)
as a result of the Company onboarding work from its major US customer. As
previously announced, Velocity signed a five-year contract with expected
revenue of £79 million ($100 million) in December 2022 with a leading US
manufacturer. The Company expects sales in the US to continue to grow, as
production ramps up at the Group's Alabama facility.

 

On the back of the strong sales growth, alongside improved gross profit
margins, the Company is expected to report a positive adjusted EBITDA* £0.4m,
the first time since the Covid-19 pandemic (FY23: £1.6m loss), as a result of
operating improvements in H2 FY24.

 

The Group has a healthy cash and liquidity position, with a gross cash balance
as at 31 October 2024 of £1.7m (FY23 £3.2m), and net cash of £0.7m
(£1.6m). The Group had cash-inflows from operating activities for FY24 of
£0.4m (FY23: outflows £1.8m). The outstanding balance on CBILs had reduced
to £1.0m (FY23: £1.5m). In addition, the Group had an undrawn invoice
discounting facility ("IDF") with the NatWest Group of up £3.0m (FY23: £0.1m
drawn). The Board is confident that the Group has a healthy level of financial
resources sufficient to support planned further growth in 2025.

 

In the Company's trading update in September 2024, the Company highlighted
delays to planned production rate increases across the global aerospace
industry, which had a short-term impact on the Group's expected growth in
FY24. The two largest civil aircraft manufacturers are reporting record order
backlogs and positive book to bill ratios in 2024.

 

The Company notes that the leading civil aircraft manufacturers are
forecasting increased aircraft deliveries in 2025, in an expected return to
more predictable and higher monthly production rates, which in turn will flow
down to Velocity's order books. For example, A350 production is planned to
double by 2028, the largest programme in the UK to which Velocity is a
supplier.

 

The Company expects further revenue growth in FY25 and continuing into the
future, while retaining a focus on operating efficiency and service delivery
excellence.

 

Jon Bridges, CEO, Velocity, commented: "This has been another year of
double-digit growth for Velocity. We have weathered the production challenges
facing the global aerospace industry, and we are entering 2025 in a healthy
position to support customers as they look to ramp up production. The
migration to composite materials in newer aircraft models continues, as OEM's
focus on improved sustainability, as well as an expected increase in Western
defence expenditure, creates more opportunities for Velocity."

 

* Adjusted for share based payments

Enquiries:

 

 Velocity Composites plc                +44 (0) 1282 577577

 Andy Beaden, Chairman

 Jon Bridges, Chief Executive Officer

 Rob Smith, Chief Financial Officer

 Canaccord Genuity Limited              +44 (0) 20 7523 8000

 Nominated Adviser and Joint Broker

 Max Hartley

 George Grainger

 Dowgate Capital Limited                +44 (0) 20 3903 7715

 Joint Broker

 Russell Cook

 Nicholas 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, that reduce costs and improve sustainability.  Customers
include BAE Systems. Hamble Aerostructures, Safran Nacelles and GKN, who
supply to the major OEMs including Airbus, Boeing, GE, Rolls Royce and
Lockheed Martin.

 

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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