Release Date: July 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cohort PLC (FRA:C7K, Financial) achieved record operating profit, revenue, and closing order book for the financial year ending April 2024.
- Revenue exceeded GBP200 million for the first time, with a growth of 11% to GBP202.5 million.
- The order intake of GBP392 million significantly exceeded recognized revenue, growing the order book to nearly GBP520 million.
- The company has over 95% revenue cover for the current year, indicating strong future performance.
- Cohort PLC's cash performance was strong, ending the year with net funds of over GBP23 million, allowing for a 10% increase in the full-year dividend.
Negative Points
- The Communications and Intelligence division performed below expectations, with MCL returning to normal levels after an exceptional previous year.
- EID had a disappointing year, making a small loss, although recent orders suggest potential improvement.
- The company faces technical and supply chain risks, although they are experienced in managing these challenges.
- There are concerns about potential capacity constraints and supply chain issues across the six businesses.
- The geopolitical landscape remains unstable, which, while driving demand, also presents uncertainties and risks for the company's operations.
Q & A Highlights
Q: Can you provide more details on the growth potential of ITS and any recruitment plans?
A: We plan to expand ITS's capabilities through recruitment, leveraging a pool of skilled individuals from the Armed Forces. ITS has been somewhat neglected, but we see growth opportunities, especially with strong customer relationships through MCL. - Andrew Thomis, Chief Executive
Q: With a strong order book, how confident are you in delivering these orders considering supply chain and capacity constraints?
A: We are confident in our ability to deliver, having increased our headcount to over 1,300. While there are technical and supply chain risks, we have provisions in place to manage them. Our supply chains are currently in good shape. - Andrew Thomis, Chief Executive and Simon Walther, Finance Director
Q: What is the status of the fourth Italian submarine contract?
A: We are under contract for three submarines, and the prime contractor has secured a contract for the fourth. We expect to be under contract for the fourth submarine within this financial year. - Andrew Thomis, Chief Executive
Q: Regarding export opportunities for CHESS, who are the best partners to go to market with?
A: Both British and German partners are excellent, with overlapping offerings. Demand for counter-drone systems is strong, particularly for battlefield situations, making these partnerships valuable. - Simon Walther, Finance Director
Q: Can you provide guidance on future R&D spending?
A: About 75% of our R&D is customer-funded, and as our order book grows, so will our R&D spending. We expect to continue increasing our investment in R&D to support business growth. - Simon Walther, Finance Director
Q: If global conflicts decrease, how might that impact your order book and deliveries?
A: Our order book is legally contracted, so any cancellations would involve compensation. While a decrease in conflict could impact future orders, current contracts are secure. - Simon Walther, Finance Director and Andrew Thomis, Chief Executive
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
