1H18 Interims deliver positive progress
FY18E well underpinned
Hardide announced strong 1H18 interim results today with the continuation of positive trends experienced in 2H17. Oil &Gas, Flow Control and Precision engineering all delivered between 22-54% y/y sales growth. Progress in Aerospace continues with trials and commercial discussions with Airbus and Leonardo ongoing. The Group has delivered an improved 1H18/1H17 performance across all financial metrics with a confident outlook for 2H18. We believe our FY18E are firmly underpinned by the 1H18 interim results and take a conservative stance leaving estimates unchanged.
▪ The Group delivered revenue of £2.2m up 43% y/y (1H17 £1.5m). The operating loss was £0.3m vs. a 1H17 loss of £0.7m, a 57% improvement. The PBT loss was c. half that of 1H17 even as the Group absorbed a rise in overheads from £1.1m in 1H17 to £1.3m in 1H18. That reflected the absence of the US grants that were previously received in FY17 & adverse FX movements. Period end cash stood at £3.2m.
▪ The first volume orders from the oil & gas supply agreements announced with the FY17 results were received within and post the period. Significant technical achievements in fulfilling one of the supply agreements are expected to lead to further applications. The Group continues to make good progress with the Airbus engineering teams and expects significant aerospace business in the near future, which should result in lengthy commercial supply agreements. Upgrades to the UK facility to an aerospace standard are complete, the accreditation of the US facility is on track and the first new reactor is due for delivery and commissioning in 2H18.
▪ Post the period end, the Group completed its annual Nadcap audit at the Bicester facility, and saw an existing customer commence production on a new downhole tool that features Hardide coatings which should become a long-term revenue stream. The Group announced its intention to enlarge its business development team in North America to focus on the growth opportunities in the region.
▪ Hardide is confident in the outlook for FY18E and expects trading to be in line with market expectations. Were the positive trends the group is experiencing to continue, we could see upward pressure on our maintained estimates as the Group progresses through the year.
