No recommendation
No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.
(Sharecast News) - Velocity Composites said on Tuesday that it remained on track to meet full-year expectations despite lower first-half revenue, as shipment phasing and supply delays weighed on sales but demand from UK customers improved.
The AIM-traded aerospace composites supplier said it expected revenue of 8.4m for the six months ended 30 April, down from 10.4m a year earlier, mainly due to shipments moving from the first half into the second half.
Adjusted EBITDA was expected to be 0.1m, compared with 0.3m a year earlier, marking the company's third consecutive half-year period of positive adjusted EBITDA.
Velocity said gross margins remained stable and overheads were lower.
Cash at the end of April stood at 0.6m, up from 0.4m at the end of October, while the company moved to a net cash position of 0.4m from net debt of 0.1m.
The company said it had sufficient balance sheet headroom, remained undrawn on its 3m invoice discounting facility, and had reduced its outstanding CBIL loan balance to 0.2m from 0.5m.
Full-year revenue expectations were unchanged, with second-half trading expected to benefit from work from Velocity's lead US customer and higher demand from legacy UK customers.
The company said first-half sales were affected by timing of UK customer orders, with delivery scheduled for the second half, as well as material supply delays in the US.
Supply has now restarted and lost sales are expected to be recovered in the second half.
In the US, Velocity said it was in advanced discussions with prospective new customers and had appointed a US sales executive to focus on the market.
New programmes are expected to be served from its Alabama facility, which has completed its NADCAP audit with merit status.
The delayed transfer of the final work programme from Velocity's first US customer is now committed to begin in the second half, with completion expected as the group enters the 2027 financial year.
Velocity said rates on the programme were likely to be significantly higher than previously expected because end-customer demand had increased.
In the UK, sales to legacy customers were higher than management initially expected and are expected to contribute continuing revenue through the second half and potentially beyond.
A previously announced programme with an existing customer has completed first article inspection and ramped to full production in Burnley.
Velocity also said it had closed its satellite facility at Fareham and transferred all production to Burnley, allowing it to cut overheads and improve operational efficiency.
Chief executive Jon Bridges said the group had made further progress in the first half, while strengthening its balance sheet and streamlining operations.
"While revenues reflect the phasing of shipments, our full-year expectations remain unchanged, with a tone of cautious optimism supported by the now-confirmed transfer of the final work programme from our first US customer," he said.
Velocity said civil aerospace production trends remained positive, particularly on platforms including the A350, B737 and B787.
It added that it was monitoring any potential impact from the Iran conflict on airline traffic, demand and supply chains, particularly as many materials are oil-based.
The company said it would report its interim results on 24 June.
At 1108 BST, shares in Velocity Composites were up 7.63% at 14.26p.
Reporting by Josh White for Sharecast.com.
See latest RNS on Investegate