After a two-week delay, Dialight reports its earnings over the past six month for the period that ended September 30 includes relatively flat sales, but a 19.3 million loss due to legal issues and ongoing expense increases.
Dialight initially planned to release it’s earnings report on November 11, but delayed the announcement when Chief Financial Officer Carolyn Zhang announced her resignation.
In February of 2024, Dialight announced Chief Executive Officer Fariyal Khanbabi had resigned, with Steve Blair taking the position.
Dialight is currently suing former manufacturing partner Sanmina for $220 million in damages, alleging fraudulent and willful misconduct, gross negligence, and contractual breaches.
Key points for the 6-month period ended 30 September 2024
- Revenue broadly unchanged from comparable 6-month period.
- Underlying operating profit from operating activities improved to US $0.9m (6-month period to 30 September 2023: loss of US $2.5m) reflecting stronger gross margins and strong control of operating costs.
- Non-underlying costs of US $25.4m charged during the period; US $22.3m reflects costs of Sanmina litigation; including a US $19.5m provision recognized at 30 September 2024 in relation to the Board’s best estimate of the settlement of damages. Additional charge of US $3.1m recognized relating to transformation project.
- Positive net cash flows of US $5.6m generated from underlying operating activities after tax and interest with a further US $5.2m cash inflow from the gain on disposal of the Traffic business; net bank debt reduced to US $15.4m (31 March 2024: US $16.4m).
- Good progress achieved in executing the transformation plan with focus on streamlining the Group, accelerating growth, and improving profitability.
Commenting on the results, Steve Blair, CEO, said:
“The current state of the economies in which we operate provides a cautious outlook for capital expenditures across various sectors. High underlying inflation and ongoing labor shortages are major constraints, causing delays in project timelines and deferring investment decisions. The petrochemical industry, in particular, faces additional uncertainty due to fluctuating demand and unpredictable energy prices. There is added hesitation and increased uncertainty following the recent US election as businesses anticipate potential policy changes, further delaying capital commitments. However, the relentless focus by management on executing the Transformation Plan is beginning to show positive results and provides a solid foundation to achieve our medium-term ambitions. With this background, the Board is confident that further progress will be made in the second half of the year.”
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