AB Dynamics reports record-breaking 2023 results

(Sharecast News) - Transport testing, simulation and measurement specialist AB Dynamics reported record-breaking results for 2023 on Wednesday, with revenue reaching £100.8m, representing a 21% increase. The AIM-traded firm said the surge in revenue was accompanied by an improvement in gross margin, which rose to 59.5%, marking a 290-basis-point increase.

Adjusted EBITDA grew 18% to £20.5m, while adjusted operating profit increased 21% to £16.6m.

Statutory operating profit rocketed 103%, reaching £12.6m.

Adjusted cash flow from operations exhibited robust growth, climbing 14% to £23.5m, as the company finished the year with a net cash position of £32m, compared to £29.2m in the prior year.

Earnings per share saw significant gains as well, with adjusted diluted earnings per share rising 26% to 60.8p, and statutory diluted earnings per share increasing by 129% to 47.4p.

The total dividend per share for the year reached 6.36p, reflecting a 20% increase year-on-year.

AB Dynamics said its financial performance was driven by a number of factors, including strong growth in track testing and laboratory testing and simulation, particularly in the European market.

While revenue increased 21%, a substantial portion of that growth - 7% - was organic.

Track testing revenue grew 6%, supported by increases in robots and advanced driver assistance (ADAS) platforms.

Laboratory testing and simulation, on the other hand, saw organic growth of 10%, driven by an impressive performance at rFpro and the delivery of SPMM systems.

The acquisition of Ansible Motion contributed to the overall sector revenue growth of 74%.

AB Dynamics also successfully maintained a solid proportion of recurring and service-based sales, accounting for 40% of total sales.

The company said it effectively mitigated inflationary cost pressures, leading to improved gross margins of 59.5%.

Operational highlights included progress in expanding into new markets beyond the automotive sector.

ABD Solutions secured a £1m contract for a retrofit pedestrian detection system for construction machinery, , while VadoTech extended its contract to provide testing services in Beijing and secured a new contract near Shanghai.

The board said the integration of Ansible Motion, acquired in September 2022, proceeded as planned, with the business delivering strong results.

AB Dynamics also said it continued to invest in new product development, aligning with its technology roadmap for existing track testing and simulation markets, as well as the core technology for ABD Solutions.

Additionally, it launched a range of ADAS motorcycle and pedestrian dummies and introduced ray-tracing capability for its simulation software.

Looking ahead, the company said it was well-positioned to sustain its growth momentum, supported by strong organic growth in the automotive sector, opportunities beyond automotive markets through ABD Solutions, enhanced simulation and software capabilities from acquisitions, and a strong financial position.

Current trading in 2024 had been encouraging, with the firm expecting to make further financial and strategic progress, with continued growth prospects driven by long-term structural and regulatory growth drivers in active safety, autonomous systems, and vehicle automation.

"The group has delivered a strong performance in 2023, demonstrating the benefits of the investment made in recent years in the commercial and operating capability of the business," said chief executive officer Dr James Routh.

"The financial results show further strong progress, with record levels of revenue and operating profit and an improvement in operating margin.

"In parallel, the group has further strengthened its platform for growth through both organic investments and acquisitions."

Dr Routh said the company saw significant opportunity in its core markets in automotive, which were supported by long-term structural and regulatory growth drivers, and were continuing to invest in new product development and technology.

"In addition, we are investing in new technologies to diversify the business into attractive adjacent markets through ABD Solutions.

"Trading in 2024 has been encouraging, supported by a solid order book providing good visibility into the second half of the year.

"Whilst being mindful of timing of pipeline conversion and customer delivery schedules, the board remains confident that the Group will make further financial and strategic progress and its expectations for 2024 are unchanged."

At 1317 GMT, shares in AB Dynamics were up 1.15% at 1,719.6p.

Reporting by Josh White for Sharecast.com.