11 December 2024
This announcement contains inside
information for the purposes of Article 7 of the Market Abuse
Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and
is disclosed in accordance with the Company's obligations under
Article 17 of MAR. Upon the publication of this announcement via a
Regulatory Information Service, this inside information is now
considered in the public domain.
Strip Tinning Holdings
plc
("Strip
Tinning" or the Company")
Lifetime Value of Contracted
Nominations Increased
Trading and Operational
Update
Strip Tinning Holdings plc (AIM:
STG), a leading supplier of specialist connection systems to the
automotive sector, is delighted to announce a £11.7 million
increase, in aggregate, in the value of its contracted
nominations¹. As such, 93% of the Company's revised sales
expectations for 2025 and 82% for 2026 are now contracted (with
annual sales values of £8.5m and £13.4m respectively).
Consequently, the Company's sales are expected to grow by 82% from
the end of 2024 to the end of 2026. Further, the Board remain
confident that the Company will meet EBITDA market expectations in
both FY24² and FY25². FY24 revenue is expected to be
c.£9.0m.
Nominations
The Company has announced four major
nominations in 2024. On each, Strip Tinning engineers have been
working with its customers to respond to requests for added
functionality into the product designs. The added functionality has
enhanced the value of the products such that the lifetime value of
the nominations has increased. On a like-for-like basis³ the total
lifetime value of all nominations now held has increased by 12.2%
from £95.7 million as at 30 June 2024 to £107.4 million⁴
today.
On 6 June 2024, the Company
announced a major £43.0 million nomination in its Battery
Technologies ("BT") division. Revised prices have now been
agreed with the customer for this programme which increase the
lifetime value to £56.8 million initially and the customer has
indicated there is likely to be further volumes which would
potentially increase the final lifetime value to £60.0 million.
With respect to the SoP and ramp-up profile, the customer is taking
a measured approach to their roll out. On this basis we have taken
a similarly prudent approach to our own volume ramp up numbers and
we anticipate volume production taking off in the first half of
2026, although in the interim period higher volumes of prototypes
are to be shipped in 2025. As a result of these changes, BT sales
are now expected to be lower than previously expected for 2025 and
2026, but higher in the subsequent years leading up to 2030.
Meanwhile the customer continues to order further samples and is
also paying for the purchase of production tooling.
In April, the Company also announced
two significant "smart glass" PDLC glazing nominations, with a
combined value of £18.6 million, scheduled for SoPs in Q3 2025 and
Q3 2026 respectively. These two projects are progressing well and
remain on schedule. A fourth nomination of multiple low volume
premium vehicles with PDLC totalling £1.1 million was also recently
announced, with its SoP scheduled for 2025.
Customers have commitments to pay
for all tooling for all the above programmes. Total commitments are
worth £1.0m. To date all long lead time tools have been ordered and
customers have paid £0.3m to cover initial down
payments.
Operational
The Company has also undertaken
several operational improvements to address current headwinds in
the automotive sector, reduce its forecast financial leverage and
negate increased employment costs, which are expected to rise by
£0.2m in 2025 and £0.3m in 2026, because of increased employer's NI
payments and the increased National Living Wage.
A revised manufacturing strategy,
including increased out-sourcing and postponing a move to a single,
larger new site, has reduced planned capital expenditure to the end
of 2026 by £4.4 million and will materially reduce the build-up of
working capital. The increase in the size and cost of the
engineering team will also be less than anticipated, reflecting the
revised manufacturing strategy and a sharper focus on our new
business initiatives. Going forward, the priority in the Glazing
division will be programmes with earlier SoP dates and lower
capital requirements, suitable for our current manufacturing
capacities. BT sales efforts will focus on a handful of existing
customers with attractive projects with SoP dates from 2027
onwards, by which point the lead BT programme should be launched
and cash generative.
Outlook
These operational actions, along
with the benefit of these increased nominations, should allow the
Company to meet market expectations for EBITDA in FY24 and FY25.
Improved cash flows resulting from the revised manufacturing
strategy mean that net debt from 2025 onwards is now expected to be
very materially reduced. All this will be achieved whilst retaining
the Company's growth objectives and serving a high-quality
portfolio of strategic customers.
Adam Robson, Executive Chair of Strip Tinning,
commented:
"The Company's expected growth is largely driven by our
secured nominations, along with our strong customer relationships
and new sales pipeline. We are proud of the excellent work our
teams have done, which has allowed us to optimise and significantly
reduce the investments required to deliver this growth and
accelerate our path toward profitability and positive cash
flow.
The Board remains confident that given the Company's
nominations successes and strong sales pipeline, by the end of 2026
the Company will now nearly double its sales and will be
profitable. In 2027 and onwards the Company will be both profitable
and cash generative and aims to have increased its sales fourfold
by the end of 2028."
Notes
1 A
nomination can be defined as a formal contract to supply components
for particular vehicle models or programmes over a certain
period.
2 Strip
Tinning understands that as at the date of this announcement,
market expectations for the years ended 31 December 2024 and 2025 are for
Adjusted EBITDA of (£1.9m) and (£1.6m). (Source:
FactSet)
3 All lifetime values of nominations
expressed at constant exchange rates as at 1 June 2024.
4 Since 30 June 2024, £3.5 million
of products have been shipped, so reducing the current lifetime
value of all existing and new nominations to £107.4 million as at
31 October 2024.
The person responsible for arranging the release of this
information on behalf of the Company is Adam Robson, Executive
Chair.
Enquiries:
Strip Tinning Holdings plc
Via Alma
Adam Robson, Executive
Chair
Mark Perrins, Chief Executive
Officer
Kevin Edwards, Chief Financial
Officer
Singer Capital Markets (Nominated Adviser and Sole
Broker)
+44 (0) 20 7496 3000
Rick Thompson
James Fischer
Alma (Financial
PR)
striptinning@almastrategic.com
Josh Royston
+44 (0) 20 3405
0205
Joe Pederzolli
