Sparks - Filtronic

Filtronic has reported FY26 results (y/e 31 May) broadly in line with its June trading update. Revenue of £55.5m was slightly down y-o-y and was in line with our forecast. Stripping out the £3.5m SpaceX warrant amortisation charge and £2m impact of the weaker dollar versus sterling, underlying revenue was up 6% y-o-y. The company’s efforts at diversification have started to pay off – SpaceX made up 68% of FY26 revenue compared to 83% in FY25, with higher contributions from other space, aerospace & defence and communications customers. Adjusted EBITDA of £11.3m was slightly ahead of our £11.1m forecast, representing a margin of 20.4% compared to 30.2% in FY25. This reflects the high level of investment made over the last two years in manufacturing capacity, engineering resource, programme management and commercial engagement. Cash at year-end was £12.9m, and after lease liabilities, was £7.3m (the company entered into a 10-year lease for its new Sedgefield facility).  As highlighted in the June trading update, the company has an order backlog covering 90% of FY27 consensus revenue (ie £56.3m out of £62.5m), and the board remains confident of delivering FY27 results in line with market expectations. Revenue is expected to be H2 weighted, reflecting the transition from gallium arsenide to gallium nitride production.