VEL Velocity Composites Plc

12 December 2024

VELOCITY COMPOSITES PLC

("Velocity", the "Company", the "Group")

Trading Update & Notice of Results

Velocity Composites plc (AIM: VEL), the leading supplier of composite material kits to aerospace, is pleased to announce its trading update for the 12 months ended 31 October 2024 ("FY24"). The preliminary figures set out below are subject to final audit. The Company expects to publish its FY24 results on 29 January 2025.

Highlights:

·    Revenue was up 40% to £23.0m (FY23: £16.4m), driven by growing US sales

·    A positive adjusted EBITDA* of £0.4m, the first time since the Covid-19 pandemic (FY23: adjusted EBITDA loss £(1.6m)

·    Maintained a healthy cash and liquidity position with cash-inflows from operating activities of £0.4m (FY23: outflows of £1.8m)

·    The Company anticipates further growth in FY25 and beyond, as higher monthly production rates are expected in the global aerospace industry

At £23.0m, revenue was slightly ahead of current market forecasts, driven by increased sales in the US. Sales in the US quadrupled to £7.9m (FY23: £2.0m) as a result of the Company onboarding work from its major US customer. As previously announced, Velocity signed a five-year contract with expected revenue of £79 million ($100 million) in December 2022 with a leading US manufacturer. The Company expects sales in the US to continue to grow, as production ramps up at the Group's Alabama facility.

On the back of the strong sales growth, alongside improved gross profit margins, the Company is expected to report a positive adjusted EBITDA* £0.4m, the first time since the Covid-19 pandemic (FY23: £1.6m loss), as a result of operating improvements in H2 FY24.

The Group has a healthy cash and liquidity position, with a gross cash balance as at 31 October 2024 of £1.7m (FY23 £3.2m), and net cash of £0.7m (£1.6m). The Group had cash-inflows from operating activities for FY24 of £0.4m (FY23: outflows £1.8m). The outstanding balance on CBILs had reduced to £1.0m (FY23: £1.5m). In addition, the Group had an undrawn invoice discounting facility ("IDF") with the NatWest Group of up £3.0m (FY23: £0.1m drawn). The Board is confident that the Group has a healthy level of financial resources sufficient to support planned further growth in 2025.

In the Company's trading update in September 2024, the Company highlighted delays to planned production rate increases across the global aerospace industry, which had a short-term impact on the Group's expected growth in FY24. The two largest civil aircraft manufacturers are reporting record order backlogs and positive book to bill ratios in 2024.

The Company notes that the leading civil aircraft manufacturers are forecasting increased aircraft deliveries in 2025, in an expected return to more predictable and higher monthly production rates, which in turn will flow down to Velocity's order books. For example, A350 production is planned to double by 2028, the largest programme in the UK to which Velocity is a supplier.

The Company expects further revenue growth in FY25 and continuing into the future, while retaining a focus on operating efficiency and service delivery excellence.

Jon Bridges, CEO, Velocity, commented: "This has been another year of double-digit growth for Velocity. We have weathered the production challenges facing the global aerospace industry, and we are entering 2025 in a healthy position to support customers as they look to ramp up production. The migration to composite materials in newer aircraft models continues, as OEM's focus on improved sustainability, as well as an expected increase in Western defence expenditure, creates more opportunities for Velocity."  

* Adjusted for share based payments

Enquiries:

About Velocity Composites plc

Based in Burnley, UK, Velocity is the leading supplier of composite material kits to aerospace, that reduce costs and improve sustainability.  Customers include BAE Systems. Hamble Aerostructures, Safran Nacelles and GKN, who supply to the major OEMs including Airbus, Boeing, GE, Rolls Royce and Lockheed Martin.

By using Velocity's proprietary technology, manufacturers can also free up internal resources to focus on their core business.  Velocity has significant potential for expansion, both in the UK and abroad, including into new market areas, such as wind energy, urban air mobility and electric vehicles, where the demand for composites is expected to grow.