Pennant International back on track with outlook looking positive (LON:PEN)

Pennant International Group plc (LON:PEN) Chief Executive Officer Phil Walker caught up with DirectorsTalk for an exclusive interview to discuss the repositioning of the business, benefiting from increased defence spending, getting back on track after COVID, progress of the MTE programme and what’s next for the company.

Q1: Pennant International has been repositioned and it’s increasingly going after software deals. Phil, how are you doing in that and how will these software deals make a difference?

A1: It’s quite simple for us really. The business strategy has been focused on expanding our software and services capabilities so if you go back to March 2020, the business acquired a software suite called R4i, which resulted in the business owning a complete end to end solution of software assets that assists people with management of complex data.

Following on from that, we appointed a Director of Sales and Marketing for the group, based in the US, and we’ve been expanding ourselves and our marketing teams. As a result, we’ve been targeting new markets, new sectors and most pleasingly we’ve had success in North America. There was an announcement towards the end of 21/beginning of ‘22 of two new North American commercial aerospace customers.

In effect, the mix of the business has shifted towards higher margin software-linked activities, which now account for over 52% of our revenue in the first half of this year. It’s also meant that actually from a recurring revenue point of view, we’ve got about 65% on our revenue now from software and recurring business and we’ve got a more diversified global business as well.

Q2: Now, the world is a much more dangerous place in the face of Russian aggression and the UK committed to a large increase in its defence spending. What’s your view on the changing landscape and as a defence stock, how might the business benefit?

A2: Well, the Russian/Ukraine conflict has highlighted the importance of national security and strategic investment in capability. My view is that this uncertainty will result in budget expansion, not just for the UK, but across the globe, and I think this will be played out in three or four key areas.

The first one being I can see investment in existing equipment and upgrades as people look to maintain what they’ve got. Clearly, there’s going to be a drive to replenish stocks, there’s a lot of stocks being utilised and people are going to need to replenish what’s been used. I think there’s going to be significant maintenance and upgrade spend as well from defence organisations and the final one is probably the most important longer term trend is that this is driving investment in the next generation of equipment and associated training systems.

What does that mean? From our perspective, we’ve had a longstanding relationship with defence institutions and OEMs and the company’s well placed through its technical training capabilities to support this grown requirement.

Alongside this investment, there’s also obviously going to be the need for the requirement for people to make maintain complex data and again, our integrated product support capability and solutions are aligned with this requirement.

In summary, I think the landscape for Pennant International is one of opportunity.

Q3: The business took a big hit during COVID, have you managed to get things back on track?

A3: We believe so and I think the H1 results demonstrate that return to positive performance with great news.

As we mentioned previously, the business has in effect been repositioned and as part of this strategy, we’ve also completed a wide ranging cost reduction exercise, and we’ve removed in excess of £1 million from an employee cost base.

As a business, we actually targeted achieving a breakeven EBITDA of about £60 million in revenue and in effect, the combination of business mix and the decisive action taken means that this is now achievable for us about £13 million, which is far more resilient as business.

Again, as you mentioned, we’ve recently disposed of excess property, we announced a couple weeks back the disposal of our HQ for £2.1 million and this is driven as we all know by the shift to hybrid home working, coupled with the change in business mix.

So, the business is back on track and it’s forecast to be profitable for the year as a whole.

Q4: Now, in terms of legacy contracts, is the MTE programme with General Dynamics reaching a conclusion?

A4: The MTE programme has been well publicised and from our perspective, we’re almost complete. We delivered two devices in the first half of the year and the final two devices are scheduled to be delivered soon, once the facility is actually finished.

We fully expect all four training devices to be completed during the second half this year and, again well publicised, this will remove a loss making legacy contract, which has suppressed our earnings in recent period and allow us to actually show the underlying performance the business is driving.

Q5: So, what’s next for Pennant International? What should people be looking out for?

A5: The H1 trading update was encouraging. I think I mentioned a return to a positive EBITDA and the first priority for us is to continue this progress towards sustainable growth and recurring revenues, and I think we’re well on track to do that.

We talked at the start about investment moving towards more complex, higher capability equipment, this is going to require increased complexity and training and maintenance, which aligns neatly with our strategy and presents us with significant opportunities.

People should look out for our innovative new products. First and foremost, our re-engineered software solution GenS, which is our replacement for the long standing and well known OmegaPS product. This is important for a number of factors, but mostly because this will transcend sectors, whereas its predecessor product was defence only, and they should all be looking at for software-led, innovative modular training solutions, such as our engine systems type trainer, which can be sold on various commercial models.

Both of these new solutions alongside our aligned strategy are designed to address this change in market dynamics and having repositioned the business during the last couple of years, return to profitability and with £13 million worth of orders already contracted for ‘23, the outlook is looking positive for the group.

Click to view all articles for the EPIC:
Or click to view the full company profile:
Share on facebook
Share on twitter
Share on linkedin
Pennant International Group

More articles like this

Pennant International Group

Training technology firm sitting on platform for growth

A Cheltenham-headquartered training technology specialist believes it is benefitting from being a “leaner, more streamlined organisation” and is now sitting on a platform for growth after narrowing its half-year losses. In an update to the London Stock Exchange,

Pennant International Group

Pennant International sees return to positive earnings

Cheltenham-based training tech provider Pennant International Group has seen a return to positive earnings for the six months ended June 30.  Group revenues for the Period of £6.9 million (down from £7.4 million in the first half of last year) of which

Pennant International Group

Technical Document Authoring

Whether you need to develop maintenance manuals, training guides, bills of material, installation guides, or task cards, superior technical documentation can be the difference between technological innovation or failure when it comes to producing new products for customers. Good documentation

Pennant International Group

ASD S1000D Training

Pennant provide the expertise and training you need to make the transition to the ASD S1000D Specification effortless. Their flexible training program ensures you and your team will receive the training you need in the format and timelines

Pennant International Group

CESST product video

Pennant International Group plc (LON:PEN) is a leading global provider of technology-based maintainer training and integrated product support solutions.

Pennant International Group

Pennant selling site for £2.1 million

A leading global provider of training technology has exchanged contracts for the sale of its facility in Gloucestershire. Recognising a reduced need for space at its sites, Pennant International Group decided to put its former head office in

Pennant International Group

Pennant International GenS Product Suite

GenS Product Suite • Manages Logistics Support Analysis data• Maintain detailed configuration of complex equipment• Interfaces with ERP Systems• Compatible with S1000D delivery standard for R4i and data-sharing with Analyzer Analyzer • Fast, accurate and user-friendly optimisation tool•

Pennant International Group

Pennant International disposing of Pennant Court office

Pennant International Group PLC – Cheltenham, England-based training technology and product support provider – Agrees sale of former Cheltenham head office Pennant Court to Pripco Ltd for £2.1 million in cash. Proceeds from the sale will go towards

Pennant International Group

Pennant International to sell its facility Pennant Court

Pennant International Group plc (LON:PEN), a leading global provider of training technology and integrated product support solutions, has announced that it has exchanged contracts for the sale of its facility known as Pennant Court. With the Group’s increasing

Pennant International Group

Pennant – Studio Services

Pennant International Group plc (LON:PEN) is a leading global provider of technology-based maintainer training and integrated product support solutions.

Pennant International Group

Pennant International report a return to positive EBITA

Pennant International Group plc (LON:PEN), a leading global provider of training technology and integrated product support solutions, has issued the following trading update for the six months ended 30 June 2022. The Company expects to publish its Interim Results

Pennant International Group

Pennant at DVD 2022

DVD 2022 is being held on 21-22 September, at UTAC Millbrook and Pennant are excited to be attending. Their team will be ready to discuss your requirements and demonstrate Pennant’s suite of solutions. DVD is a biennial Defence

Pennant International Group

Ship, Rail & Automotive

The ship, rail and automotive manufacturing industries rely on accurate data for their operator and maintenance manuals. Many manufacturers still depend on out-dated, manual methods for utilising and storing their data. Their current source can be multiple spreadsheets

Pennant International Group

R4i Writer – CSDB Integrated S1000D Authoring

R4I WRITER PROFESSIONAL R4i Writer is a powerful XML Authoring tool which is optimized for the ASD S1000D data formats. Now authors can easily create high quality operational and maintainer information. R4i Writer installs “Ready to Write” with schema’s

Pennant International Group

Pennant TAS Rail examples

Pennant International Group plc (LON:PEN) is a leading global provider of technology-based maintainer training and integrated product support solutions.

No more posts to show