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: +44 (0)1223 892 696
Jon Jayal, Chief Executive Officer
Johan Olivier, Chief Financial Officer
Nominated Adviser and Broker: Tel: +44 (0) 20 7220 0500
Cavendish Capital Markets Ltd
Matt Goode / Simon Hicks (Corporate
Finance)
Tim Redfern / Harriet Ward (ECM)
Joint Broker: Tel: +44 (0) 20 7523 8000
Canaccord Genuity Limited
Simon Bridges / Andrew Potts
Financial PR: Tel: +44 (0)20 3405 0205
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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