Xaar (XAR) H2 2024 earnings summary

Executive summary

• 2024 saw revenue below targets due to market headwinds and a greater-than-expected ceramics decline, but new business revenue grew 23% and strategic diversification into new markets derisks future growth.

• Leadership transition occurred, with new CEO Paul James planning to purchase shares, and proactive cost management supported results.

• Significant progress in Wax and Textiles, with turnkey solutions accelerating OEM launches.

• The company is leveraging differentiated technology to drive growth in EV battery coating, automotive coating, and desktop 3D printing.

Financial highlights

• Group revenue declined 13% year-over-year to £61.4m, mainly due to ceramics market decline and OEM delays.

• Gross margin held at 36% despite lower sales and higher energy costs, aided by a 16% reduction in operational expenses.

• Adjusted profit before tax was £0.3m; adjusted EBITDA fell 42% to £3.7m; R&D investment was £5m (8% of revenue).

• Net cash at year-end was £8.7m, up 23% from the start of 2024, reflecting disciplined cash and working capital management.

Outlook and guidance

• Medium-term outlook is positive, with new market opportunities and OEM adoption expected to deliver meaningful revenue and attractive margins.

• Short-term headwinds persist, especially from EPS market slowdown and macroeconomic uncertainty.

• Revenue from EV battery and 3D printing expected in 2024, with automotive coating revenue anticipated from 2026.

• Management remains cautious on precise timing due to ongoing economic and geopolitical uncertainty.