Oxford Instruments PLC (OXINF) (FY 2025) Earnings Call Highlights: Strong Revenue Growth and ...
Revenue Growth: 6.5% increase, particularly strong in the second half.
Group Margin: Improved to 17.8% at constant currency.
Semiconductor Growth: Strong double-digit growth.
Cash Conversion: Rebounded to 89% from a low prior year result.
Adjusted Operating Profit: Nearly 11% growth.
Imaging and Analysis Margin: Improved by 60 basis points to 24.7%.
Advanced Technologies Margin Improvement: 360 basis points increase.
Nanoscience Sale: Sold for GBP60 million, expected to improve group margin by 190 basis points.
Free Cash Flow: Nearly GBP32 million, up from GBP13.5 million last year.
CapEx Expectation for FY26: Around GBP10 million to GBP12 million.
Dividend Growth: Increased in a material and sustainable way.
Share Buyback Program: GBP50 million announced.
R&D Investment: GBP41 million, 8.2% of revenue.
Order Book Visibility: Robust with orders up and backlog in line with historical norms.
Warning! GuruFocus has detected 1 Warning Sign with OXINF.
Release Date: June 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Oxford Instruments PLC (OXINF) reported a strong year with 6.5% revenue growth and nearly 11% growth in adjusted operating profit.
The company announced the sale of its quantum-focused nanoscience business for GBP60 million, which is expected to positively impact group margins by around 190 basis points.
The company achieved a significant uplift in group margin to 17.8% at constant currency, with strong double-digit growth in the semiconductor sector.
Oxford Instruments PLC (OXINF) has simplified its structure, creating two new divisions, which allows for more focused investment in areas with better value creation potential.
The company has a robust order book, providing good visibility for the year ahead, with orders up and order backlog in line with historical norms.
There was continued weakness in the healthcare and life sciences sectors, with no recovery seen in the second half of the year.
The company faced a nearly GBP19 million fall in revenues from China due to changes in the export licensing regime.
Oxford Instruments PLC (OXINF) experienced significant currency headwinds, particularly affecting US-denominated revenues.
The company took an impairment charge of around GBP26 million related to its Belfast-based imaging business, which faced operational challenges.
There is continued uncertainty in the US academic sector, which represents a significant portion of the company's revenues, due to federal budget uncertainties.
Q: Can you provide more detail on the momentum with commercial customers in the healthcare and life science sector? A: Richard Tyson, CEO: There are several moving parts in healthcare and life science. We are not calling it an uptick yet, but it is pleasing that it has stabilized and returned to a positive book-to-bill ratio. We are not assuming a big improvement for the year ahead but expect to improve profitability based on actions taken in Belfast.
Q: How are you ensuring that pruning the portfolio does not affect the trickle-down of high-level research into more profitable products? A: Richard Tyson, CEO: We are retrenching and moving more into partnerships. The core technology is loved by customers, and OEMs want to partner with us. This strategy allows us to focus on products with more volume potential and reduces the drag on engineering resources.
Q: Why sell the nanoscience business now rather than wait for more growth? A: Richard Tyson, CEO: The decision was based on the business's historical performance and future potential. We saw limited margin improvement and growth over the next five years. The inbound interest and market check indicated we got full value for it, and we are happy with the sale.
Q: Why is Oxford Instruments outperforming the semiconductor market? A: Richard Tyson, CEO: The compound semiconductor business is driving growth, supported by hyperscale data centers, quantum activity, and next-gen power chips. On the silicon side, our detector business benefits from supply chain relocations and new product launches. Our regional sales efforts also contribute to this growth.
Q: How does the M&A pipeline look, and what are your thoughts on buybacks if M&A is quieter? A: Richard Tyson, CEO: We have refreshed the M&A pipeline and are looking at a range of targets. We are not looking to turn things around but seek quality businesses that fit our model. Regarding buybacks, we are starting a GBP50 million program and will consider further buybacks if M&A does not progress.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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