Last close As at 05/08/2026
GBP2.42
▲ 9.00 (3.86%)
Market capitalisation
GBP533m
Research: TMT
Filtronic’s year-end trading update confirmed that it expects to report FY24 revenue and adjusted EBITDA ahead of our forecasts. Trading in H2 benefited from strong demand from the space market, which we expect to continue into FY25. The company confirmed that it has ramped its production capability to meet this higher level of demand and continues to invest in further capacity expansion to provide flexibility and support for future growth.
Filtronic |
FY24 ahead of expectations |
FY24 trading update |
Tech hardware and equipment |
21 June 2024 |
Share price performance
Business description
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Analyst
Filtronic is a research client of Edison Investment Research Limited |
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Filtronic’s year-end trading update confirmed that it expects to report FY24 revenue and adjusted EBITDA ahead of our forecasts. Trading in H2 benefited from strong demand from the space market, which we expect to continue into FY25. The company confirmed that it has ramped its production capability to meet this higher level of demand and continues to invest in further capacity expansion to provide flexibility and support for future growth.
Year end |
Revenue (£m) |
EBITDA* (£m) |
PBT* |
Diluted |
DPS |
P/E |
05/22 |
17.1 |
2.8 |
1.5 |
0.53 |
0.00 |
133.0 |
05/23 |
16.3 |
1.3 |
0.1 |
0.06 |
0.00 |
N/A |
05/24e |
25.4 |
4.8 |
3.3 |
1.50 |
0.00 |
47.2 |
05/25e |
35.1 |
7.9 |
5.9 |
2.64 |
0.00 |
26.9 |
Note: *EBITDA, PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
FY24 trading ahead of expectations
Filtronic expects to report FY24 revenue of c £25.4m (4.7% ahead of our forecast) and adjusted EBITDA of at least £4.8m (11.9% ahead of our forecast). Gross cash was £7.2m at year-end (our forecast £3.5m) and cash net of PPE lease liabilities was £5.2m (our forecast £2.5m). We have revised our forecasts to reflect the expected outturn in FY24, which results in a normalised diluted EPS upgrade of 18%. For FY25, we maintain our revenue and profit forecasts but assume a better net cash position at year-end of £5.8m (vs our previous £4.0m forecast).
Building the infrastructure to support growth
Filtronic noted that in H2 it scaled business operations significantly to meet strong demand across its core markets. In particular, it ramped production of E-band Cerus 32 solid state power amplifiers (SSPAs) for use in SpaceX’s Starlink constellation and is now delivering in line with ongoing customer demand. It is further investing in its manufacturing capabilities to support future growth and to provide flexibility as the opportunity pipeline converts. Filtronic also highlighted good progress in the aerospace and defence market, noting contracts won with BAE, QinetiQ and DSTL, and we believe it is well positioned to win further business from large defence primes as defence spending responds to growing global threats.
Valuation: Growing confidence
The stock has gained 45% since we last wrote in April, in our view reflecting growing confidence in the growth potential of the business following the strategic partnership with SpaceX, and now trades on a P/E of 47.2x FY24e and 26.9x FY25e. Using a 10-year reverse discounted cash flow with a WACC of 8%, the current share price is arrived at using revenue growth of 13% per year for FY26–34e and EBITDA margins growing from an estimated 22.4% in FY25 to 24.9% over the period. In our view, the relationship with SpaceX, as well as growing penetration of the aerospace and defence market, provide avenues for sustainable growth.
Changes to forecasts
Exhibit 1: Changes to forecasts
£m |
FY24e old |
FY24e new |
Change |
y-o-y |
FY25e old |
FY25e new |
Change |
y-o-y |
Revenues |
24.2 |
25.4 |
4.7% |
56.0% |
35.1 |
35.1 |
-0.1% |
38.4% |
EBITDA |
4.3 |
4.8 |
11.9% |
278.2% |
7.9 |
7.9 |
0.0% |
63.6% |
EBITDA margin |
17.7% |
18.9% |
1.2pp |
11.1pp |
22.4% |
22.4% |
0.0pp |
3.5pp |
Normalised/reported operating profit |
3.0 |
3.5 |
17.0% |
1386.8% |
6.2 |
6.2 |
0.0% |
75.4% |
Normalised/reported operating margin |
12.4% |
13.9% |
1.5pp |
12.4pp |
17.6% |
17.6% |
0.0pp |
3.7pp |
Normalised/reported PBT |
2.8 |
3.3 |
18.4% |
N/A |
5.9 |
5.9 |
0.0% |
80.7% |
Normalised/reported net income |
2.8 |
3.3 |
18.4% |
N/A |
5.9 |
5.9 |
0.0% |
80.7% |
Normalised basic EPS (p) |
1.29 |
1.52 |
18.4% |
N/A |
2.74 |
2.74 |
0.0% |
79.9% |
Normalised diluted EPS (p) |
1.27 |
1.50 |
18.4% |
N/A |
2.64 |
2.64 |
0.0% |
75.3% |
Reported basic EPS (p) |
1.29 |
1.52 |
18.4% |
N/A |
2.74 |
2.74 |
0.0% |
79.9% |
Net debt/(cash) |
(2.5) |
(5.2) |
105.9% |
219.5% |
(4.0) |
(5.8) |
45.8% |
12.5% |
Source: Edison Investment Research
Exhibit 2: Financial summary
Year-end May |
£m |
2021 |
2022 |
2023 |
2024e |
2025e |
|
INCOME STATEMENT |
|||||||
Revenue |
|
|
15.6 |
17.1 |
16.3 |
25.4 |
35.1 |
EBITDA |
|
|
1.8 |
2.8 |
1.3 |
4.8 |
7.9 |
Operating profit (before amort. and excepts.) |
|
0.6 |
1.6 |
0.2 |
3.5 |
6.2 |
|
Amortisation of acquired intangibles |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Exceptionals |
0.1 |
0.4 |
0.0 |
0.0 |
0.0 |
||
Reported operating profit |
0.6 |
2.0 |
0.2 |
3.5 |
6.2 |
||
Net Interest |
(0.4) |
(0.1) |
(0.2) |
(0.2) |
(0.2) |
||
Exceptionals |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Profit Before Tax (norm) |
|
|
0.1 |
1.5 |
0.1 |
3.3 |
5.9 |
Profit Before Tax (reported) |
|
|
0.2 |
1.9 |
0.1 |
3.3 |
5.9 |
Reported tax |
(0.2) |
(0.4) |
0.4 |
0.0 |
0.0 |
||
Profit After Tax (norm) |
0.3 |
1.2 |
0.1 |
3.3 |
5.9 |
||
Profit After Tax (reported) |
0.1 |
1.5 |
0.5 |
3.3 |
5.9 |
||
Discontinued operations |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Net income (normalised) |
0.3 |
1.2 |
0.1 |
3.3 |
5.9 |
||
Net income (reported) |
0.1 |
1.5 |
0.5 |
3.3 |
5.9 |
||
Average Number of Shares Outstanding (m) |
213 |
215 |
215 |
216 |
217 |
||
EPS - normalised (p) |
|
|
0.14 |
0.54 |
0.07 |
1.52 |
2.74 |
EPS - normalised fully diluted (p) |
|
|
0.14 |
0.53 |
0.06 |
1.50 |
2.64 |
EPS - basic reported (p) |
|
|
0.03 |
0.68 |
0.22 |
1.52 |
2.74 |
Dividend (p) |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
6.2 |
5.4 |
7.4 |
9.0 |
11.4 |
Intangible Assets |
1.7 |
1.5 |
1.8 |
2.0 |
2.2 |
||
Tangible Assets |
3.3 |
3.0 |
4.3 |
5.8 |
7.9 |
||
Investments & other |
1.2 |
0.9 |
1.3 |
1.3 |
1.3 |
||
Current Assets |
|
|
8.4 |
11.1 |
10.7 |
15.9 |
20.4 |
Stocks |
2.2 |
2.6 |
2.8 |
3.2 |
4.4 |
||
Debtors |
3.3 |
4.5 |
5.3 |
5.6 |
8.2 |
||
Cash & cash equivalents |
2.9 |
4.0 |
2.6 |
7.2 |
7.8 |
||
Other |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Current Liabilities |
|
|
(3.6) |
(4.0) |
(4.8) |
(7.6) |
(8.5) |
Creditors |
(2.4) |
(3.0) |
(3.7) |
(5.3) |
(7.2) |
||
Short term borrowings including lease liabilities |
(0.6) |
(0.5) |
(0.6) |
(0.8) |
(0.8) |
||
Other |
(0.6) |
(0.5) |
(0.5) |
(1.5) |
(0.5) |
||
Long Term Liabilities |
|
|
(1.7) |
(1.4) |
(1.7) |
(2.5) |
(2.5) |
Long term borrowings |
(1.6) |
(1.3) |
(1.7) |
(2.5) |
(2.5) |
||
Other long term liabilities |
(0.1) |
(0.1) |
(0.0) |
(0.0) |
(0.0) |
||
Net Assets |
|
|
9.4 |
11.0 |
11.5 |
14.8 |
20.8 |
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Shareholders' equity |
|
|
9.4 |
11.0 |
11.5 |
14.8 |
20.8 |
CASH FLOW |
|||||||
Op Cash Flow before WC and tax |
1.8 |
2.8 |
1.3 |
4.8 |
7.9 |
||
Working capital |
1.1 |
(0.8) |
(0.4) |
1.9 |
(2.9) |
||
Exceptional & other |
(1.0) |
0.3 |
0.0 |
0.0 |
0.0 |
||
Tax |
0.5 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Operating Cash Flow |
|
|
2.5 |
2.3 |
0.9 |
6.7 |
4.9 |
Capex (including capitalised R&D) |
(0.4) |
(0.3) |
(1.5) |
(1.3) |
(3.4) |
||
Acquisitions/disposals |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Net interest |
(0.2) |
(0.2) |
(0.2) |
(0.2) |
(0.2) |
||
Equity financing |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Dividends |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Net Cash Flow |
1.9 |
1.9 |
(0.8) |
5.2 |
1.3 |
||
Opening net debt/(cash) |
|
|
0.7 |
(0.8) |
(2.2) |
(0.3) |
(3.9) |
FX |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other non-cash movements |
(0.4) |
(0.4) |
(1.1) |
(1.6) |
(0.6) |
||
Closing net debt/(cash) including lease liabilities |
|
(0.8) |
(2.2) |
(0.3) |
(3.9) |
(4.5) |
|
Property lease liabilities |
1.2 |
1.0 |
1.3 |
1.3 |
1.3 |
||
Closing net debt/(cash) |
|
|
(2.0) |
(3.2) |
(1.6) |
(5.2) |
(5.8) |
Source: Filtronic, Edison Investment Research
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Research: Healthcare
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