Filtronic LON:FTC the AIM-listed electronic components business, published its full year results to end-March earlier this week, and the Durham-based company has had an excellent year.
Tipped as ‘One to Watch’ by The Armchair Trader back in February, Filtronic reported an increase in year-on-year revenue of 55.8% to GBP25.4m and the period saw earnings increase by 277% and operating profit up 1,700% to GBP3.6m.
- Wellnex IPO: A shot in the arm for struggling UK junior market
- Mortgage Advice Bureau boosted by vibrant UK property market
- Europe’s security crossroads: the shift towards strategic independence
Filtronic is a designer and manufacturer of products for the aerospace, defence, space and telecommunications infrastructure markets. Although Filtronic has been around since the 1980s as a defence contractor, before diversifying into telecommunications in the 1990s, the company has historically had quite a narrow and focussed client list, mainly government entities, especially in its defence portfolio.
Filtronic investing in growth
The electronic components business saw basic earnings per share increase from 0.22p/share to 1.45p/share, however Filtronic’s management decided that for reasons of long-term sustainability that any excess cash be retained in the business for investment in research and development to fund growth and therefore did not declare a dividend this year.
Filtronic has hoovered up a number of significant contracts in the past years, with the most significant a five-year partnership with Elon Musk’s SpaceX, where Filtronic will supply its Cerus solid state power amplifier. Jonathan Neale, Filtronic’s chairman notes: “Given the customer’s preference for vertical integration, this is a significant testament to our ability to design and deliver best in class technology.”
The company also won a GBP3.2m contract from the European Space Agency. Filtronic will develop a series of mmWave products for the next generation of the ESA’s lower earth orbit constellations and payload applications. Other big wins included radar contracts with BAE LON:BA. and QinetiQ LON:QQ. for a combined contract value of GBP6.5m.
Filtronic’s telecom business remains strong
In terms of telecoms, new orders came in from derivative products from OEMs (Original Equipment Manufacturers) and network providers, and on the design side Filtronic secured further work from the UK’s Defence Science and Technology Labs (DSTL) to design new radar products.
At the start of last month (1st July) Filtronic issued 113,880 new 1p shares as part of an exercise of options under the company’s share save plan. Filtronic opened trading today (1st August) at 66p. The company’s shares were up to 67.5p within the first few hours of trading. Over one-year Filtronic’s shares are up 295% and over the year-to-date up 210% with the AIM-listed company’s shares ranging between 14p and 80p over a 52-week period. The company has a market cap of GBP142m.
- Stock recommendations by Bridgewise. Try a free trial of Data+ for a deeper look.
Neale said in a statement to the market: “Contract wins in FY2024 require us to expand the group’s engineering and manufacturing operations into our growing sales orderbook. At the same time as we develop our electronic communications products and technology in the low earth orbit space sector, we have ambitions to do more in the defence, aerospace and security sectors. These markets have very similar needs and problems of integrating high volumes of sensors and data whilst making that data available securely, quickly and at large scale to end users. When we review what our core business is and what is adjacent market opportunity this is shifting gradually over time, and we have shown the ability to pivot when the opportunities have arisen.”
Filtronic increased its net cash pile from GBP300,000 to GBP4.2m over the year with cash in the bank of GBP7.2m.
With a robust balance sheet and a clear growth strategy, Filtronic is well-positioned to capitalise on the burgeoning opportunities in aerospace, defence, space, and telecommunications. As the company continues to expand its operations and invest in research and development, investors will be watching closely to see how Filtronic translates its recent successes into sustained long-term growth.
