Dialight plc (LSE:DIA) released Half Year 2023 results last week, with revenue down -9% over the first half of FY2022 at $89.4M (£ 73.2m) and gross margin declining to 29.6% (versus 34.9% in the same period last year). Compared to a profit of $1.47M (£1.2m) for the prior year H1 period, Dialight had a loss for H1 FY2023 of -$3.8M (-£3.1m), which drove Dialight’s net debt to $27.7M (£22.7m), compared to $25.5M (£20.9) at year-end 2022.
Dialight’s new Board Chair, Neil Johnson, who took over in May 2023, noted the completion of a detailed review of the Group’s operations and strategy, and a new transformation plan to be initiated in H2 FY2023. The plan has three key prongs: 1) streamlining the company to focus on “core LED Lighting business” (Lighting was 65% of the company’s total 2022 revenue), 2) reset and realign the company’s cost base, and 3) accelerate growth in key lighting markets.
In a separate announcement on the day of the H1 earnings release, Dialight announced the departure of CFO Clive Jennings, “stepping down as Chief Financial Officer and as an executive director of the Company with immediate effect.” Jennings, who came in on contract as interim CFO of Dialight in May 2021, moved to full time CFO in January 2022. Dialight noted a search for Jenning’s successor would commence “in due course”.
A second separate Dialight announcement was issued on earnings release day on Financing: the Company has a $34M revolving credit facility with HSBC. Dialight announced it had secured additional convenant flexibility “to support the business in the near term.” Dialight’s transformation plan, being initiated in the H2 FY2023 period, includes investment in “key workstreams”, enabled partly through divestment of non-core assets and businesses. The financing announcement notes the Board intends to “engage with key shareholders to explore undertaking an equity fundraising” in support of the transformation plan.
Resetting the business’ cost base will include changes to its manufacturing footprint, which today includes principal manufacturing sites across Mexico, the US and Malaysia. Increased automation and reduction in product range complexity will be part of the streamlining.
Dialight’s H1 FY2023 results also note that the company is considering, for FY2024, a change of fiscal year end, as well as a change in presentational currency (to US dollars from Pounds sterling), since most of Dialight’s revenues, costs and financing are denominated in US dollars.
Looking ahead, Dialight describes the full year outlook as “below our prior expectations”, while noting that the second half of the fiscal year is typically the stronger revenue period. Slim pickings for positive news.
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Dialight H1 FY2023 Presentation