TIDMDSCV
RNS Number : 7401N
discoverIE Group plc
25 January 2023
For Release
7.00am, 25 January 2023
discoverIE Group plc
Q3 Trading Update and Acquisition Completion
Good trading momentum and completion of Magnasphere acquisition
further strengthens US footprint
discoverIE Group plc (LSE: DSCV, "discoverIE" or the "Group"), a
leading international designer and manufacturer of customised
electronics to industry, today issues a trading update covering the
three month period to 31 December 2022 ("Q3" or the "Period") and
announces that the previously reported acquisition of Magnasphere
Corporation ("Magnasphere") has been completed.
Trading Update
The Group's positive trading momentum continued through Q3 with
the strong order book providing good visibility of demand.
Group sales in the Period were 11% ahead of last year(1) , of
which 5% was organic(2) , 3% from acquisitions and 3% from foreign
exchange. Q3 sales represented a new record high for the Group and
were 2% ahead sequentially of Q2. For the 9 months ended 31
December 2022, Group sales were 21% ahead of last year, of which
11% was organic, 7% from acquisitions and 3% from foreign exchange
with 11% organic growth in both divisions.
The order book remains at a high level and ahead of last year.
As previously guided, it has begun to normalise from the record
level reported at 30 September 2022 as it converts into sales and
we expect this to continue through the final quarter of the
year.
Gross margins in the Period continued to be robust and the
semiconductor sourcing issues flagged last year, impacting two of
our 21 businesses, are continuing to improve.
Accordingly, the Group is on track to deliver full year
underlying earnings ahead of the Board's expectations.
The Group is well-funded with gearing at 31 December 2022 of
1.0x on a proforma basis(3) . With the Group's target gearing range
being 1.5x to 2.0x, there remains good headroom for further
acquisitions with a continuing pipeline of acquisition
opportunities.
With a clear strategy focused on long-term, high quality,
structural and sustainability-aligned growth markets across Europe,
North America and Asia, a diversified customer base, a strong order
book and pipeline of acquisition opportunities, the Group is well
positioned to make further progress .
Acquisition of Magnasphere
The acquisition of Magnasphere, announced on 22 December 2022,
has now completed following the receipt of required vendor
shareholder approvals with the cash consideration of $22.0m
(GBP18.5m) on a debt free, cash free basis, before expenses, being
funded from the Group's existing debt facilities. The acquisition
is expected to be immediately enhancing to Group underlying
earnings as well as accretive to the Group's underlying operating
margin.
Magnasphere, founded in 2002, designs and manufactures high
performance magnetic sensors and switches for industrial electronic
markets including access control, data centres and specialist
vehicles. The business is based in Waukesha, Wisconsin, with
manufacturing facilities in Goshen, Indiana and will operate within
the Group's Variohm cluster of specialist sensor businesses as part
of the Sensing & Connectivity division whilst retaining its
distinct brand identity.
For further information, please contact:
discoverIE Group plc 01483 544 500
Nick Jefferies Group Chief Executive
Simon Gibbins Group Finance Director
Lili Huang Head of Investor Relations
Buchanan 020 7466 5000
Chris Lane, Toto Berger, Jack Devoy
discoverIE@buchanan.uk.com
Notes
1. Growth rates refer to the comparable prior year period unless stated.
2. Organic growth for the Group compared with last year is
calculated at constant exchange rates ("CER") and is shown
excluding the first 12 months of acquisitions post completion (CPI
in May 2021, Antenova in August 2021, Beacon in September 2021 and
CDT in June 2022) . In calculating CER, the average sterling rate
of exchange weakened 2% against the Euro and 13% against the US
Dollar compared with the average rates for the same period last
year, while strengthening 3% on average against the three Nordic
currencies.
3. Gearing is defined as net debt divided by underlying EBITDA (excluding IFRS 16, annualised for acquisitions). Proforma gearing includes the acquisition of Magnasphere as if it had completed at 31 December 2022.
4. This trading update is based upon unaudited management
accounts and has been prepared solely to provide additional
information on trading to the shareholders of discoverIE Group plc.
It should not be relied on by any other party for other purposes.
Certain statements made in this update are forward looking
statements. Such statements have been made by the Directors in good
faith using information available up until the date that they
approved this update. Forward looking statements should be regarded
with caution because of the inherent uncertainties in economic
trends and business risks.
Notes to Editors:
About discoverIE Group plc
discoverIE Group plc is an international group of businesses
that designs and manufactures innovative electronic components for
industrial applications.
The Group provides application-specific components to original
equipment manufacturers ("OEMs") internationally through its two
divisions, Magnetics & Controls, and Sensing &
Connectivity. By designing components that meet customers' unique
requirements, which are then manufactured and supplied throughout
the life of their production, a high level of repeating revenue is
generated with long term customer relationships.
With a focus on sustainable key markets driven by structural
growth and increasing electronic content, namely renewable energy,
medical, electrification of transportation and industrial
automation & connectivity, the Group aims to achieve organic
growth that is well ahead of GDP and to supplement that with
complementary acquisitions. The Group has an ongoing commitment to
reducing the impact of its operations on the environment and with
its key markets aligned with a sustainable future, MSCI has awarded
the Group an ESG "A" rating.
The Group employs c.5,000 people across 20 countries with its
principal operating units located in Continental Europe, the UK,
China, Sri Lanka, India and North America.
discoverIE is listed on the Main Market of the London Stock
Exchange and is a member of the FTSE250, classified within the
Electrical Components and Equipment subsector.
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