Avingtrans revenue rises amid supply chain disruption
By Josh White
Date: Wednesday 22 Feb 2023
(Sharecast News) - Engineering group Avingtrans reported a revenue increase to £50m for its first-half on Wednesday, compared to £44.5m for the same period in 2021.
The AIM-traded company's adjusted EBITDA increased 11.4% in the six months ended 30 November to £6.4m, with a 12.8% adjusted EBITDA margin.
Its board declared an interim dividend of 1.7p per share, up from the 1.6p half-year distribution it made in 2021.
While the group's gross margin decreased slightly to 32.6%, the firm said that was due to its OEM-versus-aftermarket mix.
Its adjusted profit before tax rose to £4m from £3.8m year-on-year, and its adjusted diluted earnings per share from continuing operations increased to 10.8p from 10.2p.
Avingtrans said its cash inflow from operating activities grew to £4.1m from £4.0m, while net cash excluding IFRS16 debt stood at £17.3m at period end, widening from £16.7m at the end of May.
That was after further investments in Magnetica, Adaptix, and working capital due to ongoing supply chain disruption effects.
The company said its operational highlights in the period included investments in Hayward Tyler, Energy Steel, and Booth, which it said were bearing fruit.
Its order book was stronger than average across the group, with order cover for the 2023 financial year being over 90% as of January.
The nuclear sector orders and prospects were increasing, particularly in the United States.
Avingtrans said its pinpoint-invest-exit (PIE) strategy for organic growth and added value through mergers and acquisitions was proving successful.
The medical sector's compact, helium-free MRI and 3D x-ray systems had potential, while the further Magnetica investment round was completed as planned, and the company made a further £2m convertible loan investment in Adaptix 3D x-ray.
It noted that it was pursuing the planned exit of the HT Luton site, but progress was said to be slow.
After the period ended, Avingtrans acquired the assets of competitors Hevac and HES for £0.85m through Ormandy.
"Our proven PIE model has once again delivered robust results in the period, exhibited by increased revenue and consistent gross margins, despite inflationary pressures and supply chain instabilities, to deliver a double-digit percentage rising adjusted EBITDA," said chairman Roger McDowell.
"The group continues to invest across its three divisions, with a focus on the global energy and medical markets, to position them for maximum shareholder value, by means of exits in the years to come.
"The MRI system development at Magnetica and 3D x-ray system development at Adaptix are proceeding to plan."
McDowell said there were on-going improvements in other business units such as at Booth, adding that the firm's value creation targets were being accomplished as anticipated, underpinned by a "conservative" approach to debt.
"Our markets are continuously evolving and strategic merger and acquisition opportunities remain a priority for Avingtrans.
"Businesses like ours can command high valuations at the point of exit.
"Whilst the board remains vigilant in the current environment, we are confident about the current direction and potential future opportunities across our markets."
Strong order intake and the timing of contract revenue recognition had provided management with good visibility over the second-half revenue and profits, Roger McDowell added, notwithstanding ongoing supply chain disruptions.
"Therefore, the board remains cautiously confident about achieving full year market expectations."
At 1209 GMT, shares in Avingtrans were down 4.15% at 371.4p.
Reporting by Josh White for Sharecast.com.
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