Q&A with Hardide Plc CEO Phillip Kirkham (LON:HDD)
Posted by: Amilia Stone 16th May 2018
Hardide Plc (LON:HDD) Chief Executive Officer Phillip Kirkham caught up with DirectorsTalk for an exclusive interview to discuss their interim results, continued growth in the oil & gas sector, Airbus & Leonardo projects, their US facility and expected news flow for the coming months.
Q1: First off, congratulations on a strong set of results. Phil, can you talk us through the highlights?
A1: Certainly. Its a very positive performance in the first half of this year with revenues up 43% compared to the same period last year and a much-reduced loss at EBITDA level.
These results continue the trend weve seen over the past 5 half-year results, with each half showing an increase in revenue, increase in growth profit, increase in gross margin and reducing losses. In addition, weve got a much stronger balance sheet now following the over-subscribed fundraising that we did last October.
We are seeing an increased demand from our existing customers within the oil and gas sector but also from brand new customers and new development projects.
Volume sales have also commenced from the two major supply agreements that we mentioned last year with the first one producing revenue in the first half and the second one just starting to produce revenue in the second half. Were also making very good progress with Airbus towards finalising all the engineering and production details we need to move forward there.
The US facility continues to perform well with the new reactor on schedule for delivery in the second half and were now starting to see a lot of interest from US aerospace companies.
Q2: As you mentioned, the oil and gas sector has shown strong growth for Hardide, do you see this continuing?
A2: The signs are very encouraging, and we continue to see further business in this sector, the oil and gas price rise weve seen recently should also stimulate production. Interestingly, our major oil and gas customers report continuing strong demand through the rest of 2018 and as I mentioned earlier, we now have new applications starting to generate revenue.
Q3: Youve detailed development and testing work with Airbus and Leonardo Helicopters, can you tell us how these relationships are progressing?
A3: Both Airbus and Leonardo are putting in a tremendous amount of time and effort into these projects which indicates the importance of them getting Hardide on flying parts as soon as possible.
The detailed engineering work is continuing and is making really good progress and we are of course working with other aerospace OEMs on a variety of parts which now includes aerospace companies based in the US.
Q4: If we just turn to the US facility in Virginia, it appears to be progressing well, what will this add to the group?
A4: Well, having a facility in North America has been really key to some of the developments were making with customers there and we see significant further opportunities in this region in many sectors. To ensure that we capitalise on these opportunities, were actually in the process of recruiting for an additional US-based Business Development Manager to support this.
The facility itself continues to perform very well with excellent quality and excellent on time delivery metrics. The new coating reactor, currently being manufactured, will be delivered and commissioned before the end of the financial year and will ensure that we have the capacity to take on more business there.
Q5: Finally, what news flow can investors expect to see in the remainder of the year for Hardide?
A5: I wish we could give more detail about the applications and the customers weve recently developed but the industry is very secretive, and were bound by very strict non-disclosure agreements not to divulge any information. As you can understand, this makes it very difficult for us to give regu
Unfortunately the market is currently in a sell on news mode, as demonstrated by todays sp action. No matter how good the conventional numbers I sense the market is marking time until news on the aero orders.
But then watch it fly ( pun intended ;-))
A very positive set of interim results in my view.
I am especially encouraged by the chairman's comments about the developement in aerospace products for Airbus and Leonardo.
Excellent prospects for the future IMHO!!
Article: Diamante A&T (Italy)
Enhanced diamond tools made with CVD-coated TSP diamonds show enhanced thermal stability and improved performance: Diamante A&T magazine has printed this technical paper that was presented at the Euro PM Congress & Exhibition in Milan in October 2017 by Hardide Coatings Technical Director, Dr Yuri Zhuk. Read the paper in Italian and English on pages 56-64 here.
Just read your last two posts on LSE, Nicky. Not a site invisit very often because of the high number of nonsense posters there.
But, found yours very interesting and thank you for posting.
Peeps on here would be interested, Im sure.
Hi, MJ. I dont do sp predictions due to the complete unpreedicatability of AIM, but I would like to see HDD in the 2-3p region on the first Aero order. The oil/ gas business pays the bills and gives steady growth but its not going to give us a rerate in sp. Aero orders will do that, the market is huge if our product is accepted as the gold standard.
Beat me to it nicky!
Positive update with good progress on all fronts.
Bit disappointed there is no update on Aero (I feel this is where real money is to be made once orders and then revenue start to flow)
But this should be enough to reverse the current downward trend.
Hardide (AIM: HDD), the developer and provider of advanced surface coating technology, is pleased to give the following update on trading for the first six months of its current financial year to 30 September 2018.
Overall trading is firmly ahead of both H1 and H2 2017. Sales are more than 40% higher compared to H1 2017 and almost 25% higher compared to H2 2017. This is primarily due to increased demand from customers in the oil and gas sector, while sales to flow control and precision engineering customers are also ahead of both periods in the previous year.
The final GBP0.82m of the fundraising was received in February following HMRC advance assurance of EIS eligibility. The new coating reactor is currently being manufactured and is on schedule to be installed at Martinsville, Virginia in Autumn 2018. Various operational enhancements have also been completed at Bicester.
The Board expects the trading performance for the full financial year to be in line with market expectations.
Half year results are expected to be published on 14 May 2018
Last meaningful development news was last June. And from the AGM statement...
Multiple aerospace applications continue in development and testing across a range of customers in the UK, Europe and North America. Considerable detailed work is underway with the engineering teams at Airbus and a number of parts are currently either in testing or in the sample preparation phase. In addition to the civil aerospace sector, tests have started on parts with two new prospective customers in the defence sector. The Board remains confident that production orders will result from this work and will keep the market updated as appropriate.
So, where are we now, I wonder?
Surely there must be a few aero orders coming through now?
Next scheduled update two months away.
...I sold a few in order to top up in FRR.
Made a small profit (and only sold a small proportion of my total holding)
Still holding the rest, ready for take off when first Airbus contract is announced;-)))
Hardide Plc Q&A with CEO Phil Kirkham: Final Results (LON:HDD)
Posted by: Amilia Stone 13th December 2017
Hardide Plc (LON:HDD) Chief Executive Officer Phil Kirkham caught up with DirectorsTalk for an exclusive interview to discuss their final results for the year ended 30th September 2017.
Q1: Now, this morning we saw your results published, can you talk us through the highlights?
A1: Certainly. I think it shows real solid growth within the business, its a record revenue year of £3.24 million which is 51% higher than the last financial year and it shows really a good trajectory. Our second half, H2, was 14% increase in sales on the first half of the year and if you look at the last 4 half-years, weve shown steady growth, half-on-half in both sales and gross profit. During the year, weve benefited from a recovery in the oil and gas markets, our oil and gas sales in this year were 92% higher than the previous year.
So, overall, its a really good trajectory, really solid growth, really good figures and were very well positioned for the future.
Q2: You recently had an over-subscribed fundraising of £2.54 million, can you tell us how the money is being used?
A2: Weve got a projected expansion of our business in the year to date which indicates that well need more capacity in 2018, North America already accounts for about half of the total group sales. So, we have actually ordered 1 new coating reactor for the Martinsville, Virginia facility which takes the number of coating reactors from 2 to 3 and thats due to be commissioned in August 2018. Weve also got, or we will have, the money in the bank to fund an additional reactor, over and above the one weve just ordered, when the time is right, when we see the increase in demand which we expect to be in 2019.
In addition to that, we also want to get the US facility up to aerospace standards and get the AS9100 approval for the site, similar to what we have in the UK so thats one of the main areas were spending the money on. In addition to that, weve got a number of process improvements in the UK and the US that we want to put into place as well as some more significant laboratory equipment.
Of course, having a strong balance sheet, having cash on the balance sheet, is very important for our customers to see.
We need to just mention that part of the fundraising has not yet been received because its subject to further EIS/VCT clearance from the HMRC, which we are currently waiting for, which will bring in another £800,000 to make the £2.5 million in total once thats all received.
Q3: Hardide reported its gained full Airbus Approved Supplier status and achieved Nadcap accreditation, how will this add to Hardides operation?
A3: Were always very pleased to have gained the significant accreditations and approvals this year, both the Airbus Approved Supplier status and the Nadcap accreditation, both for the Bicester site, these have really put a really good platform for securing future aerospace business.
Of course, at the moment, were still in discussions with Airbus and others, theres tests going on, live testing on wing components for the Airbus A320, A330 and the A380 family of aircraft and also on landing gear parts as well as other fixed and rotary wing aircraft components.
Unfortunately, progress is slow due to the nature of the business, the aerospace industry, but also the critical nature of the components that were being asked to coat.
So, that in addition to getting on the plan to bring the US facility up to the aerospace standard during 2018 is really where were going forward.
Q4: Going forward then, what are the main focus areas, lets say over the next few months?
A4: Well, were continuing to work on our aerospace business with Airbus, Leonardo and many other primes and tier 1 subcontractors to the industry and getting this US site to AS9100 approval.
Weve also recently signed supply agre
Fantastic set of numbers today.
Brilliant recovery, now on track for profitability with healthy revenue and excellent margins
(Quietly building my stake)
(ii still not quite got the site sorted so cant put BUY flag)
The sp seems, at last, to be stirring from its slumber. I detect a resurgence in interest in HDD following recent developments and snippets of news.
I note also that the PoO has risen to $64 a barrel which is bound to help with the increase in oil industry activity, further justifying the recent raise which was to improve manufacturing facilities, particularly in the US.
An order for our services from the aerospace industry would be the icing on the cake.
Thanks, Nicky. So, results on 11 Dec. In line with expectations, 50% increase in revenue over previous year which I suppose reflects the increase in O&G activity following earlier lows. Production ramping up with additional roasters in the pipeline.
On top of all that weve got the aerospace potential waiting in the wings.
Whats not to like. If you dont mind waiting a month or two this is bound to take off.
Hardide Plc Q&A with CEO Philip Kirkham: £2.54 Million Fundraise (LON:HDD)
Posted by: Amilia Stone 31st October 2017
Hardide Plc (LON:HDD) Chief Executive Officer Philip Kirkham caught up with DirectorsTalk for an exclusive interview to discuss the £2.54 million fundraise, the potential loan with Martinsville-Henry County Economic Development Corporation, their North American oil & gas framework agreement and their current trading
Q1: Now, youve just announced that Hardide has raised £2.54 million, before expenses, can you tell me why you raised these funds?
A1: Certainly. I think to start, Id like to say that weve got some very supportive investors out there, we obviously did some roadshows around the market over the last week and the comments and the enthusiasm we got back from our investors was fantastic and the fundraising was actual oversubscribed so that was good news as well.
Basically, its all about development of the business, were obviously seeing a growing demand from existing oil and gas customers and weve got some good prospects with new customers as well. We recently signed a framework agreement with a large oil and gas operator and were in the final stages of negotiating a deal with another North American oil and gas company as well.
The Virginia facility that we opened in 2016 is performing really well and we project that the 2 coating reactors we have there, that we started operating in 2016, will be at capacity during 2018 so we need to plan to install more reactors there. With these taking about 10 months from order to getting them ready to work we need to order 1 now and plan to order a further reactor in about a years time. The second reactor were planning to order is going to probably be a bigger size reactor than we currently have so we can coat larger components which were seeing from the customers.
Q2: Can you also tell us more about the potential loan with Martinsville-Henry County Economic Development Corporation?
A2: Its a very low interest loan of 2% over 5 years from the local community in Martinsville who have been very supportive all the way from us deciding to set up in Martinsville 2 years and supported us in many ways whilst weve been operating there. So, basically, they want to continue to support our growth in continued investment in capital and jobs in the locality. We havent actually got the loan yet, its in the final stages of preparation and were expecting the paperwork in the next few days.
Q3: You also mention a framework supply agreement signed with a major North American operator in the oil and gas sector, can you tell me anything about it?
A3: Unfortunately, very little, as our confidentiality clauses within the contract which is pretty typical for customers in the oil and gas industry, theyre very protective about what exactly theyre doing as they dont want their competitors to know.
Its Hardides first framework agreement with a major oil and gas operating company and its a very complicated, intricate product that were coating for them, but itll obviously benefit them at the end of the day by using the Hardide technology and give them significant improvements in performance and proficiency.
We do work with many of the global oil service companies to improve performance of their tools and working directly with an operator enables them to see for themselves the actual coating technology and Im sure theyll be many more different applications that well see in this field.
Q4: Will you be recruiting more staff to service the increase in capacity?
A4: Yes, we will, particularly in North America as we expand there and grow, we will need more business development resource to handle the growing opportunities that we see there and obviously, more production staff as we install more reactors and to handle the greater volume of components that we expect to go through the facility.
Q5: Finally, can you tell us a little more about Hardid
Agreed. Shareholder participation would be preferable in every case but the placing is hardly discounted from recent prices. Usually you would see a much more heavily discounted price than this.
Chances are youll get a chance to buy at 1.7 over the next few days.
Im fully loaded at a lower average so staying put where I am until the sp really takes off when those aerospace orders come flooding in :-))
It may be good news but once again it shows that some shareholders are more equal than others. As I see it my holding is diluted without being given the opportunity to subscribe for new shares to support a company I have been invested in for 10 years.
Placing at 1.7p announced today.
Not quite the news I was waiting for but on the plus side the proceeds are to be put to good use to expand the business. Equipment to be acquired to meet future orders.
Placings not often viewed as good news but, in this case its a sensible move to position the company for onward progression as new orders come to fruition.
Press release: New HT/HP subsea valve coating collaboration
An international collaboration between Hardide Coatings and Master Flo Valve Inc (MFV) has developed a new solution to protect high temperature, high pressure (HT/HP) subsea choke valves.
The valves are the first of their kind to feature the Hardide-T coating, which can be applied to choke valve stems so they can withstand temperatures up to 400°F and pressures of 20,000 psi.
Canada-headquartered MFV found that alternative hard coatings previously applied to the stem assembly were not rated to sufficiently high temperatures. The challenge was to have a durable coating with a completely smooth finish to form a tight metal to metal seal.
The two companies worked together to engineer a solution and develop a manufacturing process plan.
Philip Kirkham, CEO of Hardide Coatings commented: The subsea market is constantly evolving and we must react to the changes. Developments in coating technology for HT/HP applications were essential and we have worked with MFV to create the right solution for them. Its success has been demonstrated by qualification to all API requirements and deployment deepwater for a major oil and gas operator.
Hardide-T is one of our toughest coatings and has overcome a key challenge for MFV. It is used on two of their product lines and has the potential to expand into other subsea choke valve sizes and models with HT/HP requirements.
Hardide Coatings and MFV oversaw the manufacturing process and fine-tuned it to ensure specific surface finish and geometrical tolerance requirements were met.
The coating has been applied to MFVs P4-15K choke valve, which is rated from -20°F to 400°F and 15,000psi, and the P4-20K choke valve, which is rated to the same temperatures but a greater pressure of 20,000psi.
They are typically installed on subsea production trees and are used for single/multi-phase production or water/chemical/gas injection. There is also an application for use on a capping stack, designed to be deployed in the event of a blow-out situation.
From HDD website
"Mail had a problem with abrasive wear on the deflector blades of its sorting machines in its mail centres throughout the UK. This was causing cost and safety concerns. We worked with Royal Mail over several months to develop and test a solution and Royal Mail expect to fit all their letter sorting machines in the UK with Hardide-coated deflector plates in time for Christmas 2017."
Obviously not a big enough contract to warrant RNS but shows it's worth looking in on their site occasionally.
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