25th Jul 2024. 9.09am
Regency View:
Update
Regency View:
Update
Altitude hits new heights with record-breaking results
Altitude Group’s (ALT) share price jumped higher this week following a bullish trading update. The branded merchandise provider delivered an impressive performance for the fiscal year ending 31 March 2024 (FY24).
The company reported record-breaking results, with revenues rising by 33% at constant currency to £24 million from £18.8 million in the previous fiscal year. Additionally, the adjusted operating profit reached a record £2.4 million, marking a 31% increase at constant currency and exceeding market expectations. Over a two-year period, the Group has more than doubled its revenues and increased adjusted operating profit by over 225%.
A significant contributor to this growth was the Group’s investment in its Merchanting divisions, particularly the Affiliate programme ACS and the collegiate market-disrupting University Gear Shop solution (UGS). ACS increased its annualised expected revenues for FY24 by 32% to $18.0 million, driven by a combination of new recruitment and organic growth. Furthermore, UGS expanded its presence with 19 campus programmes across 22 locations, achieving a total lifetime contract value of approximately $45 million and annualised average expected revenues of $9 million.
The positive momentum continued into the current financial year (FY25), with a strong first quarter performance across both the Services and Merchanting divisions. ACS added an additional $2 million in recruitment, raising its annualised expected revenues to $20 million. UGS also secured new contracts and strategic partnerships, indicating ongoing growth potential.
ALT Daily Candle Chart
Alumasc build momentum following bullish trading update
As highlighted in our Weekly Briefing, Alumasc (ALU) surged higher last week following an upbeat trading statement.
The sustainable building products group reported that its underlying profit before tax is now expected to be at least £12.6 million, surpassing market forecasts and last year’s profit of £11.2 million.
Alumasc’s strong performance was driven by several key factors. The company achieved significant organic revenue growth of approximately 6.5%, outstripping the overall UK construction market, which experienced a decline of about 2%. This growth was attributed to successful innovation and commercial initiatives across its divisions.
The group’s three divisions—Building Envelope, Housebuilding Products, and Water Management—all reported higher revenue, operating margins, and profits compared to the previous fiscal year. Notably, the Building Envelope division gained market share due to investments in sales resources and sustainable roofing solutions, while Housebuilding Products launched new items that mitigated the impact of decreased housing starts.
CEO Paul Hooper expressed optimism about Alumasc’s growth strategy, emphasising the company’s focus on environmentally sustainable solutions, capability enhancement, and continued self-help initiatives to drive further growth in returns.
ALU Daily Candle Chart
H&T trading in line with expectations
H&T Group (HAT) announced that its trading performance is aligning with expectations as it prepares to release its interim results for the six-month period ended 30 June 2024.
The company, which is the UK’s largest pawnbroker, reported that business performance has been steady and consistent with forecasts since its last update in mid-May.
The availability of small sum credit remains constrained across the broader market, but this has not dampened demand for H&T’s pawnbroking services, which continue to be robust. Although the pace of redemptions took longer than anticipated to moderate following an uptick in the spring, they have shown the expected trend of moderation through June and July.
As of 30 June 2024, the capital value of the Group’s pledge book was £105 million, reflecting an increase from £95 million a year earlier and £101 million at the end of December 2023. This indicates stability and growth in the key metrics related to the pledge book.
Retail sales, including those from high-quality new and pre-owned jewellery and watches, along with revenues from foreign currency exchange, are performing as forecasted. Additionally, scrap margins are improving in line with expectations.
HAT Daily Candle Chart
hVIVO’s strong order book hits £71m
hVIVO’s (HVO) share price rallied back to recent highs last week following the release of its trading update, which showed a strong performance in the first half of 2024…
The human trial specialist reported record revenue of £35.6 million, a 30.6% increase compared to the same period last year, and an improved EBITDA margin of approximately 24%, up from 19.1% in H1 2023.
Investors responded positively to the news, which demonstrated hVIVO’s robust operational delivery and its ability to capitalise on high demand for its services. The update also emphasised the successful utilisation of its three quarantine facilities, which has enhanced revenue and margins.
The trading update reaffirmed hVIVO’s full-year revenue guidance of £62 million and anticipated EBITDA margins at the upper end of market expectations. The strong order book, which amounted to £71 million, and the operational capabilities of the newly fully operational Canary Wharf facility, further bolstered investor confidence. The company’s cash position stood at £37.1 million, reflecting a solid financial foundation despite the payment of a dividend.
The positive reception of the trading update took hVIVO’s share price back to the February and March swing highs – an area that has created some resistance. Within the context of hVIVO’s long-term uptrend we would expect this resistance area to eventually be broken.
HVO Daily Candle Chart
LBG Media rally on record revenue and profit surge
LBG Media’s (LBG) share price surged higher this week following the release of a bullish trading update for the first half of 2024.
The digital engagement company’s revenue for the first half of 2024 reached £42.3 million, marking an impressive 55% increase from £27.2 million in the same period last year. This growth was driven by a combination of factors, including a 92% rise in direct revenue to £22.0 million and a 28% increase in indirect revenue to £19.7 million. Notably, the Betches acquisition contributed £7.1 million in revenue and £1.5 million in adjusted EBITDA, demonstrating the strategic value of the acquisition.
Additionally, the company’s adjusted earnings (EBITDA) is expected to be £10.2 million, a 240% increase from £3.0 million in the previous year. This increase in profitability is attributed to operational efficiencies, the successful integration of Betches, and a more effective operating model in the ANZ region. The update also highlighted a strong cash position of £26.6 million, up from £15.8 million at the end of December 2023.
The Group’s global audience grew to 493 million, further underscoring its expanding reach and influence. Despite some short-term volatility caused by Facebook’s new commercial model, LBG Media’s diversified revenue streams and strong performance in key areas have positioned the company well for continued success.
LBG Daily Candle Chart
Learning Tech tumble amidst regulatory and financial concerns
Learning Technologies (LTG) trading update for the first half of 2024 revealed a decline in revenue, primarily due to a weaker US dollar and subdued transactional revenues, despite strong performance in its SaaS and long-term services contracts. The revenue for the period is expected to be at least £248 million, down from £268.2 million in the same period last year.
Adding to the company’s challenges, LTG faced a regulatory setback in the US. GP Strategies, a key subsidiary of LTG, has had its eligibility to secure new classified contracts temporarily suspended by the US government. This suspension is part of the requirements to protect classified information and is related to the company’s compliance with operating requirements. Although GP Strategies can continue to work on existing contracts, the suspension has raised concerns about potential disruptions to future revenues from classified contracts.
LTG’s financial outlook remains under pressure as it anticipates full-year revenues between £485 million and £505 million, with adjusted EBIT expected to range from £91 million to £96 million. These figures account for the recent sale of VectorVMS and are based on the current average GBP exchange rate. The company’s net debt has decreased to approximately £6 million following the disposal and voluntary debt repayment, down from £57.2 million at the end of June 2024.
The combination of reduced revenue expectations, regulatory issues, and ongoing macroeconomic challenges has caused the storm clouds to gather above Learning Tech. We have placed our position in the stock under review and will update in due course.
LTG Daily Candle Chart
Nexteq trading update: Softer demand and revenue decline
Nexteq (NXQ) reported a challenging first half of 2024, with revenue expected to fall by 15% to $48.2 million compared to $56.3 million in H1 2023.
Key brands Quixant and Densitron saw revenue declines of 10% and 22%, respectively, due to softer customer demand and de-stocking across the industry. Despite this, the company maintained robust gross margins and strong cash flows, with net cash increasing to $36.9 million.
The outlook for the second half of 2024 anticipates revenue levels similar to H1, leading to a full-year revenue forecast 15%-20% below market expectations. Adjusted profit before tax is expected to be 30%-40% below market forecasts due to lower revenues, though cost management and strong cash flow will help mitigate some of the impact.
Looking ahead to 2025, Nexteq expects improved order intake as market conditions normalise and benefits from a healthy pipeline of new customers in both Quixant and Densitron. The company is also exploring acquisition opportunities to leverage its strong balance sheet and diversify its revenue base.
In addition, the company is undergoing a board transition, with Non-Executive Chair Francis Small, CEO Jon Jayal, and CFO Johan Olivier set to step down in the coming months. They will stay in their roles until suitable successors are appointed to ensure a smooth transition.
NXQ Daily Candle Chart
Spectra Systems awarded $37.9m sensor contract
Spectra Systems’ (SPSY) share price surged to new trend highs last week, driven by the announcement of a major contract win.
The company revealed it had secured a $37.9 million deal to manufacture advanced sensors for an existing central bank customer. This significant contract not only enhances Spectra Systems’ revenue stream but also marks a major endorsement of its technology and capabilities.
The contract includes a second tranche payment of $1.7 million, bringing the total potential value to $39.6 million. Revenue recognition from this deal will be phased in, starting from the first quarter of 2025 and extending through to the fourth quarter of 2027, with an additional $4.5 million expected from trailing revenues until 2029.
As a result of this announcement, Spectra Systems’ share price broke to new trend highs, reflecting investor confidence in the company’s future growth and profitability. The news not only highlights the company’s strong market position but also sets a positive outlook for its financial performance in the year ahead.
SPSY Daily Candle Chart
Totally faces revenue dip but eyes growth with new contracts
Totally’s (TLY) preliminary results for the year ending 31 March 2024 saw revenues dip, but contract wins provided some optimism.
The NHS insourcing company reported a 21% decrease in revenue to £106.7 million from £135.7 million in the previous year. Gross margin fell to 16.6% from 18.4%, and underlying EBITDA dropped 67% to £2.3 million.
Totally reported a loss before tax of £3.9 million, compared to a profit of £1.8 million last year. Gross cash increased to £2.3 million, up from £1.7 million at the end of September 2023.
Operationally, Totally maintained strong service standards, with all Care Quality Commission registered services rated “Good” and over two million patients treated, including 175,000 from elective care waiting lists. The company renewed several NHS contracts and secured new business, including a £1 million corporate fitness contract.
Looking ahead, Totally anticipates revenues of around £85 million and EBITDA of at least £3.5 million for the year ending 31 March 2025. The company has undertaken significant cost-saving measures and restructuring, with annualised savings of £3.5 million and new contracts and extensions indicating a recovery in business, despite the challenges faced during the past year.
TLY Daily Candle Chart
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