Adjusted earnings improve as Telit focuses on cash generation

Internet-of-things (IoT) technology company Telit reported a 10.2% fall in group revenues in its preliminary results on Wednesday, to $343.6m (£250.54m).

The AIM-traded firm said IoT cloud and connectivity revenues rose 7.3% to $44m for the year ended 31 December, however, driven by a strong performance from both the connectivity and the IoT platforms businesses.

Adjusted EBITDA was ahead 6.3% at $40.6m, with $15m of research and development capitalisation, compared to $15.3m in 2019.

Basic earnings per share totalled 4.7 US cents, down from 36 cents a year earlier, while adjusted earnings per share fell to 7.4 cents from 12.5 cents.

Profit in cash rose to $16m from $11.7m, with the board putting the “substantial” improvement down to the company’s focus on cash generation.

Net cash as at 31 December totalled $63.7m, rising from $48.2m at the end of 2019, while cash flow generated from operating activities, before movement in working capital, improved to $42.6m from $34.6m.

“Telit has once again successfully improved operational results, profitability and cash generation thanks to its refocused strategy, as well as the targeted programme of efficiencies taken early in 2020 in response to Covid-19,” said chief executive officer Paolo Dal Pino.

“The significant improvement in our overall gross margin, supported by growing IoT cloud and connectivity services revenues is particularly encouraging.

“Following the successful business transformation carried out in recent years, Telit is now fully focused on the growing and dynamic market for industrial IoT.”

Dal Pino said the firm was “well-positioned” to maintain and grow its position in the market, by increasing the differentiation of its products and services through targeted investment in key areas including 5G connectivity.

“We are clearly mindful of short-term risks that might affect us as result of the ongoing impact of Covid-19, but we are confident that the acceleration and adaptation of IoT solutions triggered by the pandemic will create medium-term benefits for the IoT market and we expect a ramp up of customer demand in 2021.

“In view of this and seeing the fruits of our team's hard work, the board is confident in the group's prospects for the future and is committed to delivering value and growth.”

At 0915 GMT, shares in Telit Communications were down 0.24% at 207.5p.