Lifetime Value of Contracted Nominations Increased

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