By Steve Moore | Wednesday 10 January 2018
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Previously writing on industrial LED lighting technology company, Dialight (DIA) I noted failure to deliver on addressing outsourced manufacturing issues. There’s this week been a “Directorate change, Trading update and outlook” and two “Director/PDMR Shareholding” announcements…
The former included “the board expects group revenue and EBIT (excluding any non-recurring items) for the year ended 31 December 2017 to be £181m and £9.7m, respectively, and net cash as at 31 December 2017 of £12.8m. Non-recurring items are expected to be £6.4m”. This compares to in December “we now expect EBIT (excluding non-recurring items) for the year ending 31 December 2017 to be not less than £9m. We expect non-recurring items to be in the region of £6m, and to end the current financial year with a strong net cash position”.
However, the adjusted EBIT compares to £6.5 million at the half-year stage (2016: £4.2 million) and £13.1 million for the 2016 calendar year. ‘Non-recurring items’ were £2.4 million at the latest half-year and cash (net) £12.7 million.
It is stated “Dialight's recent product delivery performance is a significant disappointment to the board” and that “Michael Sutsko has stepped down as Group Chief Executive and from the board with immediate effect. Martin (‘Marty’) Rapp been appointed Group Chief Executive on a permanent basis with immediate effect… Marty's previous executive experience in product delivery and his knowledge of Dialight's business as a board member gives him a unique perspective to quickly and effectively remedy the recent product delivery performance and build a robust operational platform for future growth”.
This has been followed by announcements of share purchases by Rapp and non-executive Stephen Bird. These - of £71,625 and £59,000 respectively - are not though overwhelming signs of confidence and “the board continues to expect a H2 weighting to the group's trading performance for the year ending 31 December 2018”. Hmmm.
My caution is also with Rapp although stating “my board colleagues and I are enthusiastic about the market transition opportunity”, also that “its timing is unknown”. Still expecting a H2 weighting though? - and with, at a current circa 600p share price, the market cap approaching £200 million, I currently continue to avoid.
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