Velocity Composites plc (AIM: VEL), the leading supplier of digital technology driven composite material kits to aerospace and other high-performance manufacturers, provides the following trading update for the 12 months to 31 October 2022 (“FY2022”). The Company expects to publish its FY2022 results on Tuesday 24 January 2023.
The Company anticipates that FY2022 sales will be no less than £11.9m (FY2021: £9.8m). While contracted sales remain significantly below pre-pandemic levels, there have been encouraging signs of stability and growth throughout FY2022. This is in line with published OEM forecast production rates which show continued recovery over the next three years. Velocity remains well-positioned to benefit from this growth through its long-term contracts and customer partnerships. Furthermore, the Board expects the Company’s projected EBITDA loss for FY2022 to be £0.5m (FY2021: loss of £0.5m). This is in-line with the Company’s expectations and planned investments in R&D and business development activities over the last 12-months.
Cash has been invested throughout FY2022 to support the Company’s international growth opportunities and in the development of its digital manufacturing solutions. Cash at bank as at 31 October 2022 was £2.3m (FY2021: £3.4m). The Company has access to an Invoice Discounting Facility with NatWest and a Supply Chain Finance facility with a key customer. Total undrawn headroom on both these facilities as of 31 October 2022 was £1.3m.
International Expansion into the USA
As announced at the half-year, the Company has continued its investment in international business development using its existing resources. The Company today announced a major contract success in the USA with GKN (the “Agreement”). This Agreement will provide the return on the investment made in the last year in this area and has enabled Velocity to establish a new digital manufacturing facility in the USA to service the largest composite aerospace market.
In 2022, there has been significant focus and investment in developing Velocity’s advanced manufacturing facility in Tallassee, Alabama. As well as delivering the GKN contract, there is capacity to target the US composite materials market which is larger than the market in Europe. The site is near completion and has already achieved its AS9100 quality approvals. A transfer plan leading to volume production will commence in January 2023, with the first production kits expected to be delivered in March 2023 and the full transfer completed by August 2023. The Agreement is expected to be worth in excess of US$100 million in revenue over five years. The initial revenues for the Company under the Agreement are expected to commence in Q1 FY2023 and will continue through to FY2028.
In the future, the site will become a launch hub for other customer contracts, and high-level business development activities are already underway with several potential large customers.
The long-term trend towards wider adoption of composite material technologies is expected to accelerate, with light-weighting and composite strength being critical to all electrification and hydrogen fuel developments, along with modern aerospace frames increasing composite content. The industry has a major focus on sustainability objectives in its supply chains. As a result, there are high levels of interest in the Velocity offering globally, and the Company has a healthy pipeline of new business in both the UK and in particular North America. New business and recovery in aerospace build volumes offers the opportunity for a significant advancement in the Company’s financial results.
Andy Beaden, Chairman, Velocity, said : “The last twelve months has seen real progress at Velocity. We continue to benefit from the recovery of the global aerospace industry after the pandemic. Our strategy of international expansion and investment in modern digital manufacturing and sustainable supply chain solutions is now bearing fruit. Our business is now underpinned with some significant long-term contracts, that should drive growth and suitable financial returns for the significant investments made to date in the business. The agreement with GKN in the US not only provides us with significant long-term revenues, but also enables us to build a base from which we can target other opportunities in North America, which is the biggest potential market for Velocity in the world. Demand for composite material technologies is growing as more industries wrestle with the challenge of delivering net zero. We are excited about the long-term prospects of the Company.”
Andy Beaden, Chairman
Jon Bridges, Chief Executive Officer
Adam Holden, Group Finance Director
+44 (0) 1282 577577
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