Member Info for Al180

I seem to also remember a US rough terrain military vehicle buying ST brakes for a prototype that never went into production.

Going back to Marischal were you one of the original ICI team that developed the ceramic technology ?

That's interesting Marischai, but knowing how long OEMs test new options as they did with ST how far is this from entering the global safety critical supply chain?

Good to read the posts today.

Our former CEO Richard Houlihan said in a presentation before FDA approval that he expected the technology to follow the same path as MRI of which he played a major part in global adoption.

He said progress with MTI was slow at first followed by exponential growth, I believe he will be proved right but at what point in the process we are now I'm not sure.

This has been discussed in a recent presentation saying that a Chinese and Korean company along with Brembo themselves are trying to replicate Surface Transforms brake performance but they weren't there yet.

From memory the Brembo version had a continuous fibre layer applied to a standard ceramic disc and was used in racing applications but not 100% on this.

Brembo would be the only option as they have previously done the legwork to get approval with these OEMs but they don't have a direct replacement for ST discs as far as I know

Hi Dibs61, did you previously sell out completely? If so hopefully your timing was favourable.

Well said Richie. We now have a CEO that has been there and done it with the coatings company Keronite, I think his strategy here will be the same, turn Hardide into the biggest company he can over the next three years and sell it. This ties in with the recently awarded share options.

https://www.lse.co.uk/rns/HDD/grant-of-options-and-issue-of-shares-yn7nso5ca8c3zm7.html

I share your thoughts on the restructuring costs Richie, this was also mentioned in the interim results. I have consoled myself by thinking they took us to a point where Airbus sales have gone from "toe in the water" to increasingly large contracts in one of the most regulated and difficult to enter markets, I thought the December contract may be for a new customer but confirmed in the results that both are Airbus. This is an endorsement that should be good for all parts of Hardides business. On the other hand you only have to look at the business development part of the results to see what they are doing now that previous management didn't.

Yes Rob I was hoping for £1m for FY24 as the first major contract from Airbus was now in production for more than two half year periods, it was only a £100k miss so the £0.5m in H1 could of been boosted by our more niche sales with Leonardo and military aircraft. No revenue figures were given when the current Airbus deal was announced unlike the recent one in December that will add at least £0.5m this year and around £0.7m going forward. Agree with your thoughts on FY revenue for aerospace it has been doubling every year for the past three years and expect the trend to continue.

Yes good to see cash going up to £1m and positive prospects for Q2 from the new aerospace contract and pre coated range.

I will be paying particular attention to the breakdown of H2 revenue when the results are published on the 29th Jan aerospace revenue for the past three half years were

H1 2023 £0.1m

H2 2023 £0.285m

H1 2024 £0.5m

I suspect the jump in revenue is largely down to the supply of parts for the A320 range of aircraft as this began in the second half of H2 2023, from the RNS

“The Hardide-coated components, which are critical to the operation of the flap mechanism, will be used on new-build A320s and as replacement parts for the existing fleet of aircraft as these are maintained. Initial components are expected to be coated in June 2023 with regular monthly volumes thereafter.Airbus is currently producing 50 A320 aircraft per month with plans to increase this to 75 per month by 2026”

https://www.lse.co.uk/rns/HDD/hardide-coatings-partners-with-gardner-aerospace-dr7n33iszmlh8eg.html

With them talking about regular monthly income from this contract I would hope to see H1 replicated with £1m for the full year 2024.. Aircraft models last for an average of 24 years, safety critical parts are not normally subject to change of supplier during the lifetime of the model due to the amount of testing required, with hard chrome being banned the industry has been compelled to do so on this occasion.

The aerospace contract announced on 18th December was for £6m to £8m over 10 years , this also looks like predictable income going forward, my thoughts are that the aerospace sector will become a stable and growing part of Hardides income.This would make a pleasant change after “energy” our historic major revenue contributor being so erratic.

I’m also interested to see how the pre coated range has added to industrial revenue after launching at the end of H1 2024.

2023 revenue was derived from energy 63% industrial 30% and aerospace 7%

From today's RNS…………….

“The "Performance Share" Options will only vest based on the achievement of financial performance targets that require stretching EBITDA growth in each of the three financial years ending 30 September 2027, with these targets set ahead of current market expectations.”

These options could work out quite nicely for the directors but I won't be complaining if they do. The perception of Hardide and its share price after three years of profitable growth would be very different to what it is today.

Sorry should read 2025 regarding turbine sales not 2024.

I don't think Hardide will need to raise funds they have a much reduced break even figure of £5.1M . Aerospace revenue going from £0.4M in 2023 to £0.5M in H1 so should show in the region of £1M for full year once the results are published in January, add in the new contract we are looking at £1.7M PA going forward without any new orders. Industrial should benefit from the pre coated range launched this year and I can't see them having such a bad year for energy revenue again as it was impacted by destocking following inventory builds post covid in 2022. There were also now sales to power generation turbines in 2023 which should not be the case in 2024 if what they said in the interim results materialises, this bellow from the interim's RNS in May...............

"There were no sales to the power generation sector either in the period under review or the prior period, whilst the initial set of turbine blades sold in 2022 are field tested. The customer has indicated that we should expect follow on sales towards the end of the current calendar year. We are also exploring opportunities for sales of spares to support the maintenance aftermarket in this sector."

Yes they could if production issues are solved and somehow manage to avoid running out of money completely. SCE have shown how quickly orders can come if you have a superior product approved in a safety critical supply chain, I hope the same happens to Hardide without the scale up issues.

Happy Xmas to you too alan80.

This must be a new aerospace OEM, previous RNS announcements have named Airbus as the customer .

As I mentioned in a previous post Surface Transforms faced a sudden increase in demand after entering the safety critical brake market, a disastrous scale up due to the complexity of the production process caused them to run out of cash. Hardide are only coating already manufactured parts they wont face the same issues if demand exceeds current capacity.

This is further evidence that after so many years of work to enter the safety critical aerospace market adoption is growing quickly. Previous aerospace contracts have talked of regular monthly income, revenue from this sector should be far less erratic than energy.

P.S. Are you my long lost brother alan80 :-)

Having followed both companies for a long time, what happened to Surface Transforms apart from the disastrous scale up is a big factor in why I'm confident of Hardides future.

Surface Transforms share price has tanked and shareholders look like getting wiped out, this bizarrely is because their order book increased dramatically and they needed to ramp up production capacity significantly and quickly. ST took the decision to completely redesign the production line, they manufacture ceramic brakes which have multiple and lengthy processes. Much of the new plant didn’t function properly causing long stoppages in production or discs that had to be scrapped. After multiple fundraisings within a short period of time they find themselves with many of the issues unsolved and a valuation that makes a further fundraise look impossible.

Both companies floated and started testing for safety critical components around the same time, ST won brake contracts with global auto OEMs slightly quicker than Hardide in the aerospace sector but it still took about 10 years and these were low volume at first, this developed into follow-on models with higher volumes along with new applications leading to a dramatic demand increase.

Company presentations at the time explained that getting to the point where ST started providing parts that were safety critical was a long haul but once you're in the supply chain the OEMs wont change for the lifetime of that model without a very good reason. It also makes these parts an easy option for follow-on models with the same usage and less hassle for new applications as a majority of the testing has already been done.

Should Hardide have a major increase in demand I don't see them encountering the same scale up problems as ST because they're not making something from scratch with a multiple process production line. The question is if the recent aerospace revenue numbers are the beginning of exponential growth in this sector or not.

Interesting article in this month's “Aerospace Manufacturing Magazine”. It talks about Hardide’s advantages over hard chrome and thermal spray coating on aircraft applications which it’s increasingly replacing.

hTtps://www.aero-mag.com/were-promoting-the-coating

If a large reactor was required on the visibility of future business that the smaller units can’t accommodate and current revenue was showing little or no growth It would be good to know how much and at what points in time money is paid for something that takes a year to supply.

Hopefully we will see aerospace and pre-coated parts continue their growth trend along with a recovery in the energy sector so any potential expansion costs are not an issue if required.

I hope your 20 year anniversary is a happy one, maybe a buyout around that time is also a possibility.