Light Science Technologies Holdings PLC (AIM:LST) this week outlined progress in its contract electronics manufacturing (CEM) division, highlighting three new contract wins worth just over £0.5 million.
These wins will help diversify the firm's customer base, with typical orders ranging between £100,000 and £150,000.
Management has been focused on securing new clients in CEM to offset lower revenue from the pest control division.
Chief executive Simon Deacon joined the Proactive studio to talk through this momentum in the pipeline, and here we take a look at what he said.
Proactive: I'm joined by Light Science Technologies CEO Simon Deacon. Simon, good to speak with you. Could you tell us more about these three new contract wins?
Simon Deacon: Good morning, Stephen. Yeah, it's exciting times for the contract electronics side of our business. We've won three new contracts worth just over half a million. One of them in particular is a new client from Sweden. We're doing some signage work for TfL, which is really exciting. The work will progress in this financial year and stretch out into next year.
All three contracts and customers are really good for the business because they dilute our customer base. Average orders are between £100,000 and £150,000 spread across, which is really good news. Over £300,000 of the half a million is for this new Swedish client.
So we're really pleased with progress. It narrows the gap, as pest control revenue has lowered. Having new clients come on board is what the management has been striving for in our contract electronics division, and they're proving they can convert the pipeline.
Proactive: Would you say it’s your capabilities within CEM that are driving these contract wins?
Simon Deacon: Yes. Our contract electronics side of the business and all of our divisions provide a turnkey solution. We design products within the group, then go from design to prototyping, and then to manufacture.
We don’t just manufacture the electronic board, we also make the whole casing and assembly so it can be boxed up and shipped to the distribution plant wherever they are. We do that for our internal products as well as for our client base within contract electronics.
Proactive: Can you talk more generally about CEM’s progress in the context of the group?
Simon Deacon: The company has grown dramatically over the last five years. A lot of it was down to our pest control division. We’ve been focusing on broadening that so it’s not so concentrated on pest control.
We’re bringing in other markets like audio—we’ve won new clients in audio—and also in fire protection, making sensors. We also do that for the group, whether it’s our passive fire detection division or our AgTech division. We’re making sensors across the board. Technology is really a theme through everything we do, and it’s starting to make traction in the second half of the year.
Proactive: How do you see the rest of the year for the group?
Simon Deacon: We’re quite excited. We had a good, strong first half, with margins moving up over 36% from 26%. EBITDA was tenfold from the previous half year. We’re going in the right direction now. The most important thing has been partnering with customers who have portfolio properties, or in AgTech, partnering with people who put in the infrastructure so we can put in our technology.
We’re doing that across the board and converting our £58.00 million quoted pipeline every day. I think you’ll see a lot of movement in the next half year in AgTech and also in passive fire protection as that conversion continues.
Proactive: Simon, I hope you continue to keep us posted with your progress. Thank you very much for speaking with us today.