Nexteq PLC Trading Update and Notice of Results (9092Z)

TIDMNXQ

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: [phone] 
  Jon Jayal, Chief Executive Officer 
  Johan Olivier, Chief Financial Officer 
 Nominated Adviser and Broker:             Tel: [phone] 
  Cavendish Capital Markets Ltd 
  Matt Goode / Simon Hicks (Corporate 
  Finance) 
  Tim Redfern / Harriet Ward (ECM) 
 Joint Broker:                             Tel: [phone] 
  Canaccord Genuity Limited 
  Simon Bridges / Andrew Potts 
 Financial PR:                              Tel: [phone] 
  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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January 17, 2024 02:00 ET (07:00 GMT)