REG-XP Power Ltd: Q1 Trading Update

XP PowerAnnouncement

14/04/2022 07:15

14 April 2022

XP Power Limited

(“XP Power” or “the Group” or the “Company”)

Q1 Trading Update

XP Power, one of the world's leading developers and manufacturers of critical
power control components to the electronics industry, is today issuing a
trading update for the first quarter ended 31 March 2022.

Trading

The strong momentum in order intake seen in the previous year continued in Q1,
up 37% at constant currency and 39% as reported to £102.4 million.  Demand
remains encouraging across all three sectors.  The Group has a record order
book of c.£260 million, providing very high levels of cover compared to full
year revenue consensus expectations.

Revenue of £61.8 million in Q1 was up 7% year-on-year on a constant currency
basis and 8% as reported.  Excluding the acquisitions of FuG and Guth,
organic revenue grew 1% on a constant currency basis.  As previously
highlighted industry-wide supply chain constraints, specifically the
availability of key components, global logistics challenges and the ongoing
effects of COVID-19 continued to impact product shipments.  Phase two of our
end-to-end Enterprise Resource Planning system was successfully implemented in
early March although, as expected, this also modestly impacted on shipments in
the period. 

The book to bill ratio, which tracks the relationship between orders received
and completed sales, was 1.66 for the first quarter of 2022 (Q1 2021: 1.29).

 £ Millions     Q1 2022  Q1 2021  Change  Change in constant currency  Like-for-like in constant currency  
                                                                                                           
 Orders         102.4    73.7     39%     37%                          30%                                 
                                                                                                           
 Revenue        61.8     57.1     8%      7%                           1%                                  
                                                                                                           
 Book to Bill                                                                                              
 First quarter  1.66     1.29     0.37                                                                     
                                                                                                           

The FuG and Guth businesses in Germany, which were acquired on 31 January
2022, have been successfully integrated into the Group structure and made a
strong start to trading under XP’s ownership, reporting record revenues for
the month of March.

The site for our third manufacturing facility in Asia has now been secured and
we expect to break ground at Perak, North West Malaysia during 2022.

Legal

As announced on 24 March 2022, a jury in the US legal action brought by Comet
Technologies USA Inc., Comet AG, and YXLON International (“Comet”) found
in favour of Comet and awarded damages of $40 million against XP Power.  The
Board continues to assess next steps in respect of this judgement and will
update as soon as practicable.

Financial Position and Dividend

Net debt at 31 March 2022 was £81.5 million, compared with £24.6 million at
31 December 2021.  The increased net debt reflects the acquisition spend of
£33 million on FuG and Guth, investment in working capital of around £12
million to meet the significant order backlog and the specific items,
predominantly legal fees.  The working capital investment made in Q1 2022 is
expected to be sufficient to meet the expected ramp up in revenue throughout
the remainder of FY 2022.

Net debt/EBITDA at the end of June 2022 is expected to rise to between 2.0 and
2.3 times, well within our agreed banking covenants of 3.0 times.  This
gearing includes the payment of cash during Q2 2022 should damages and legal
costs be required.  We expect net debt/EBITDA to reduce to below 2.0 times by
2022 year-end as our working capital unwinds and given the expected second
half weighting to trading.  The Group has also put through targeted price
increases to reflect the inflationary environment.

The Board has declared a dividend for the first quarter of 18.0 pence per
share (2021: 18.0 pence per share).  The ex-dividend date will be 16 June
2022 and the dividend will be paid on 14 July 2022 to shareholders on the
register at the record date of 17 June 2022.  The last date for election for
the share alternative to the dividend under the Company’s Dividend
Reinvestment Plan is 23 June 2022.

Outlook

The Group enters the second quarter with a very strong order book.  While we
remain mindful of the ongoing uncertainties in respect of component supply and
freight capacity and costs, we are optimistic on the Group’s prospects for
the full year and are progressing with our planned investment in a
manufacturing facility in Malaysia, as well as other capacity improvements, to
support the future growth of the Group.  

Longer term, the Board believes XP Power to be very well positioned to grow
ahead of its end markets.

Enquiries:

XP
Power                                                                                                                                     

Gavin Griggs, Chief Executive
Officer                                                        
+44 (0)118 984 5515

Oskar Zahn, Chief Financial
Officer                                                           
+44 (0)118 984 5515

Citigate Dewe
Rogerson                                                                                                            

Kevin Smith/Jos
Bieneman                                                                         
+44 (0)207 638 9571

Note to editors

XP Power designs and manufactures power controllers, the essential hardware
component in every piece of electrical equipment that converts power from the
electricity grid into the right form for equipment to function.

XP Power has invested in research and development and its own manufacturing
facilities in China and Vietnam, to develop a range of tailored products based
on its own intellectual property that provide its customers with significantly
improved functionality and efficiency.

Headquartered in Singapore and listed on the Main Market of the London Stock
Exchange since 2000, XP Power is a constituent of the FTSE 250 Index. XP Power
serves a global blue-chip customer base from 29 locations in Europe, North
America, and Asia. 

For further information, please visit xppower.com



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