discoverIE Group PLC (LSE:DSCV) has said positive trading momentum continued through its third quarter (Q3) with record sales, and a strong order book providing good visibility of demand means it is on track to deliver full-year underlying earnings ahead of the company board's expectations.
The leading international designer and manufacturer of customised electronics to industry also announced that the previously reported acquisition of Magnasphere Corporation has been completed.
In a trading update covering the three-month period to 31 December 2022, DiscoverIE said group sales were 11% ahead of last year, of which 5% was organic, 3% from acquisitions and 3% from foreign exchange. Q3 sales represented a new record high for the group and were 2% ahead sequentially of Q2.
For the nine months ended 31 December 2022, the company said group sales were 21% ahead of last year, of which 11% was organic, 7% from acquisitions and 3% from foreign exchange, with 11% organic growth in both divisions.
DiscoverIE noted that its order book remains at a high level and ahead of last year and, as previously guided, it has begun to normalise from the record level reported as of 30 September 2022 as it converts into sales and the company expects this to continue through the final quarter of the year.
Gross margins in the period continued to be robust, the company said, and the semiconductor sourcing issues flagged last year, impacting two of its 21 businesses, are continuing to improve.
The company is well-funded with gearing at 31 December 2022 of 1.0 times on a proforma basis, it noted, and with the group's target gearing range being 1.5 times to 2.0 times, there remains good headroom for further acquisitions with a continuing pipeline of acquisition opportunities.
"With a clear strategy focused on long-term, high quality, structural and sustainability-aligned growth markets across Europe, North America and Asia, a diversified customer base, a strong order book and pipeline of acquisition opportunities, the group is well positioned to make further progress," the trading update concluded.
Acquisition of Magnasphere
DiscoverIE also announced that the acquisition of Magnasphere, announced on 22 December 2022, has now completed following the receipt of required vendor shareholder approvals with the cash consideration of US$22.0mln (£18.5mln) on a debt-free, cash-free basis, before expenses, being funded from the group's existing debt facilities.
The acquisition is expected to be immediately enhancing to group underlying earnings as well as accretive to its underlying operating margin, the company said.
Magnasphere, founded in 2002, designs and manufactures high-performance magnetic sensors and switches for industrial electronic markets including access control, data centres and specialist vehicles.
The business is based in Waukesha, Wisconsin, with manufacturing facilities in Goshen, Indiana and will operate within the group's Variohm cluster of specialist sensor businesses as part of the Sensing & Connectivity division whilst retaining its distinct brand identity.