XTEK Ltd (ASX:XTE) has increased its revenue by 91% from the first half of 2019 to $16 million for the period ending December 31, 2019.
Revenue growth was underpinned by strong Small Unmanned Aerial Systems (SUAS) support services and sales revenue of more than $5 million as well as underlying business activities from XTEK’s value-added reseller product revenue of around $2 million.
Half-year revenue also included three months of HighCom Armor Solutions operations, following acquisition completion on September 29, 2019, after a successful placement and share purchase plan raising $3.5 million.
XTEK managing director Philippe Odouard said: “The last six months has been transformational in building our development capabilities and growing our distribution network.”
Investing in future growth
As at December 31, 2019, XTEK held $4.1 million cash, with no debt, despite the increased investment into the business with the acquisition of HighCom, and the finalisation of the new XTclave™ manufacturing centre, which opened on February 18 and will enable commercial production of the company’s advanced ballistic solutions.
XTEK also increased research & development and investment to enhance development capabilities around the new SUAS solar wing and SARBI module of XTatlas™.
Odouard said: “In a period of significant investment, including the HighCom acquisition and investment in the new manufacturing centre, our underlying business continues to perform strongly.
“We are focused on commercialisation to maximise value of our technologies, with numerous strategic discussions and business development initiatives currently underway with key stakeholders globally.
“We are well-positioned to deliver a strong performance in the second half, underpinned by the full contribution of HighCom, exports of XTclave™ manufactured products in the near term and planned delivery of value-added products and services.”
XTclave™ US expansion plans
XTEK remains well-funded and positioned to execute its plans going forward and remains focused on opportunities enabled by the US expansion, including achieving key milestones relating to the commercialisation of its proprietary technologies globally.
The company is now in a position to export XTclave™ manufactured products in the near term with direct access to the lucrative US market, the recent launch of three new products at Shot Show® in January and a commercial-scale manufacturing capability for its XTclave™ manufactured ballistic solutions now in place.
SAUS support contracts
Over the period, XTEK secured a long term SUAS support contract to the Australian Defence Force (ADF), solidifying the company’s position as a key, full-service SUAS supplier able to provide ongoing training, repair and maintenance services and should improve future margins.
Going forward, the company will be the leading full-service SUAS supplier in Australia and is well placed to win additional contracts for the supply of further UAS to the ADF and other government agencies.
The company is confident this will enhance its ability to leverage its broad networks to create opportunities to retrofit XTatlas™ software to existing SUAS and other hardware.
Australian Space Agency deal
XTEK recently signed a joint statement of strategic intent with the Australian Space Agency to utilise the unique capabilities of XTclave™ manufactured advanced composite materials for space applications.
This followed an agreement with Skykraft and demonstrates further external validation of the potential of XTclave™ technology to be utilised for products in space.
XTEK expects a stronger second half in line with the investments made into future growth capabilities.