Solid State reports record revenue, surge in profits

8th Jul 2024 09:49

(Sharecast News) - Computing, power and communications specialist Solid State reported record revenue of £163.3m in its final results on Monday, representing a 29% increase from year-on-year.

The AIM-traded firm said its reported operating profit margin improved to 8.4% for the 12 months ended 31 March, from 7.4% in 2023, while its adjusted operating profit margin rose by 120 basis points to 10.4%.

Profit before tax surged 45.2% to £12.2m, with adjusted profit before tax increasing 44.4% to £15.6m.

Diluted earnings per share were 76p, marking a 20.4% increase, and adjusted diluted earnings per share reached 99.8p, up 23.7%.

The company declared a full-year dividend of 21.5p, a 7.5% rise, and reported a 52.1% increase in net cash flow from operating activities to £14.3m.

Net debt decreased by 58% to £4.7m, demonstrating strong cash generation.

Solid State said it achieved like-for-like organic revenue growth of over 25%, as it upgraded its expectations twice during the period.

The company made significant progress towards its growth strategy to 2030, despite a 24% decline in the open order book as of 31 May, which now stood at £89.2m.

Operationally, Solid State strengthened relationships with tier-one security and defence customers, and saw particularly strong performance in communications equipment orders, driving over 60% revenue growth in its systems division.

The company normalised its order book post-pandemic with reducing lead times, demonstrating resilience through diversified market exposure despite softer demand in transport and industrial markets.

Notable achievements included Saab selecting Steatite, a Solid State subsidiary, for naval antenna assembly and the establishment of the 'Integrated Systems' business unit to enhance engineering capabilities for Tier 1 customers.

Post period end, Solid State secured an international $5.1m internet-of-things (IoT) contract award from a new US franchise line, indicating continued growth prospects.

In current trading, order intake had stabilised, with the open order book levels returning to historically normal levels.

The group said it maintained a strong order book, with open orders at £89.2m as of 31 May, showing a slight increase from year-end.

While industrial demand remained slow in the first quarter due to destocking, design-in activity across target markets was robust, presenting numerous mid-term growth opportunities.

Trading in the 2025 financial year was expected to be evenly distributed across the year, unlike the first-half weighted performance of 2024.

Year-to-date trading had been broadly in line with management expectations, supporting confidence in meeting full-year expectations.

"I am delighted to announce that Solid State has delivered another record year of growth, continued strong cash generation and reduction in debt," said chairman Nigel Rogers.

"Innovation and the group's resilient business model, sector knowledge and customer diversity has also helped drive significant organic revenue growth.

"The order book continues to return to normal levels as component lead times start to shorten."

Rogers said the group had a strong order book, and was confident that the shorter lead times would enable more efficient conversion of new orders into billings.

"Solid State is ambitious and sees this record year as an important step in ultimately delivering on its 2030 goals."

At 1012 BST, shares in Solid State were down 5.1% at 1,452p.

Reporting by Josh White for Sharecast.com.