Dialight on Tuesday prinreported group revenue of $94.4m for the six months to 30 September, up 9.3% from $86.4m a year earlier, as operating profit more than doubled to $14.9m from $5.9m.
The London-listed supplier of LED lighting for heavy industrial applications and opto-electronic components said gross margin surged to 48.7% from 35.3% in the prior-year period, adding nearly $13m to operating profit through pricing discipline, a shift toward higher-margin products and cost reduction.
The company moved into a net cash position of $4.5m, reversing a net bank debt position of $10.2m a year earlier, a swing it said was driven by higher profit and strong cash generation, even after funding $3.2m of share buybacks through its Employee Benefit Trust.
Dialight's Lighting segment, roughly 70% of group revenue, grew 14.4% to $69.1m on improved pricing and an expanded salesforce, with gross margin there climbing to 48.3% from 36.9%. Components revenue excluding the discontinued Traffic business rose 37.5%, a swing the company attributed to a strategic reinvestment in its opto-electronic product line tied to growing data centre demand.
Profit before tax rose to $14.2m from $4.5m, and diluted earnings per share increased to 24.4 cents from 6.8 cents.
The result follows a June trading update in which Dialight guided to eliminating bank debt and lifting its return-on-sales target to at least 15% for the current financial year; the company said today it had already exceeded that target in the first half, reporting return on sales of 15.8% and an EBITDA margin of 20.1%.
Steve Blair, Dialight's group chief executive officer, said the group "continues to realise the financial benefits of all five pillars of the Transformation Plan" and called the return to net cash "an important milestone".
The board said it believes the group has the potential to "significantly exceed current market expectations" for full-year net income, citing continued sales growth and gross margins expected to meet its upgraded guidance in the second half.
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There were no non-underlying costs in the first half, compared with a prior-year period that included $2.9m in Employment Retention Credits alongside Transformation Plan and pension wind-up costs.
Inventory rose to $36.1m from $30m at the March year-end, which the company said reflects additional fast-moving Lighting stock and safety stock for Components, with a further small increase expected in the second half to support sales growth.
The group's new £15m revolving credit facility with HSBC, agreed in April with a £10m accordion option, carries covenants of maximum leverage of 2.5 times and minimum interest cover of 4.0 times; Dialight said it complied with these "at all times during the first half with significant headroom".