Telit Communications PLC Trading update (4345Z)
December 15 2017 - 2:00AM
UK Regulatory
TIDMTCM
RNS Number : 4345Z
Telit Communications PLC
15 December 2017
Telit Communications PLC
Trading update
London, 15 December 2017 - Telit Communications PLC ("Telit",
"the Group", AIM: TCM), a global enabler of the Internet of Things
(IoT), has published an update, further to the announcement of 23
November 2017.
Telit expects to report continuing year-on-year revenue growth
in the financial year to 31 December 2017 and adjusted EBITDA to be
in line with previous guidance. Revenue for the nine months to 30
September 2017 was $255 million (2016: $238 million).
Telit commenced a review of its activities, cost base and
product portfolio in order to deliver a significant rationalisation
of the Group's activities and reduction in its costs. Telit intends
over time to reduce the number of its R&D centres and that any
future growth in R&D spend will be focused in low-cost centres.
The Group is also reducing its sales and general administrative
cost base.
These activities are well underway and will ensure the Group has
a much better focus on its operations and product portfolio, as
well as to reduce development and product maintenance costs. Telit
expects these measures will reduce its cash operating expenses in
the coming financial year by more than $10m, some 7% less than the
current financial year. On an annualised basis, as compared to the
runrate when the review commenced, the reduction will be
approximately 10%. The measures will also help the Group to
mitigate pressure on gross profit margins.
The Group expects to incur exceptional charges of approximately
$25m in total during the current financial year. This comprises
$16m of non-cash write downs of capitalised development costs and
inventories that relate to discontinued products and activities,
and $9m of cash expenses incurred in restructuring actions and
addressing the challenges that the Group faced during the year.
As announced on 28 September 2017, the Group's leading financing
bank granted an advance waiver for potential breach of a covenant
as at 30 September 2017, relating to the ratio of, in broad terms,
free cash flow generation against debt service obligations. The
Group satisfied other financial covenants imposed upon it as at 30
September 2017. The Group is in advanced discussions with this bank
to agree an advance waiver of potential breaches of its covenants
as at 31 December 2017. The Group and the bank are also in
discussions with regard to amending its covenants to be appropriate
for the Group going into the future.
Yosi Fait, Chief Executive, commented:
"We are determined to sharpen the focus of the business and
allocate resources appropriately, reducing our cost base in line
with market dynamics, in order to achieve our goal of being the
leader in end-to-end IoT solutions.
"Our new organisational structure is designed to support our
future development by combining the two main activities, hardware
and services, under one product management team and a unified sales
capability.
"In 2018, we expect double digit revenue growth, fueled by the
important 2017 US certifications, which together with our reduced
cost base will lead to a significant improvement in free cash flow
generation."
Enquiries:
Telit Communications PLC Tel: +44 203
Yosi Fait, Chief Executive Officer 289 3831
Yariv Dafna, Finance Director
Tel: +44 20
finnCap (Nomad and joint broker) 7220 0500
Henrik Persson/Giles Rolls (corporate
finance)
Tim Redfern/Richard Chambers (corporate
broking)
Berenberg (Joint Broker) Tel: +44 20
Chris Bowman/Mark Whitmore/Ben 3465 2722
Wright
Instinctif Partners Tel: +44 20
7457 2077
Adrian Duffield/Chantal Woolcock
About Telit
Telit (AIM: TCM), is a global leader in Internet of Things (IoT)
enablement. The company offers the industry's broadest portfolio of
integrated products and services for end-to-end IoT deployments -
including cellular communication modules in all technologies, GNSS,
Wi-Fi, short-to-long range wireless modules, IoT connectivity plans
and IoT platform services. Through the IoT Portal, Telit makes IoT
onboarding easy, reduces risk, time to market, complexity and costs
for asset tracking, remote monitoring and control, telematics,
industrial automation and others, across many industries and
vertical markets worldwide.
# # #
Copyright (c) 2017 Telit Communications PLC. All rights
reserved. Telit and all associated logos are trademarks of Telit
Communications PLC in the United States and other countries. Other
names used herein may be trademarks of their respective owners.
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation
596/2014.
This information is provided by RNS
The company news service from the London Stock Exchange
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