Rakon has reported record earnings for its year to March, but says all profit will be reinvested for growth as it moves to a new dividend policy - which sees no profit payout to shareholders after the bumper year.
Shares were up 2.45 per cent to $1.67 in early trading.The stock is up 74.5 per cent for the year.
The Auckland-based maker of advanced frequency control and timing solutions - used in everything from 5G telecommunications gear to low earth orbiting satellites to data centres that need to keep exact time - said its net profit tripled from the year-ago $9.6 million to $31m as revenue rose by a third to $172.0m.
Adjusted ebitda more than doubled to $54.4m, and came in just ahead of revised-upward guidance of $49m-$53m.
Operating cashflow improved by 51 per cent to $30.2m, while Rakon's net cash increased by $18.2m to $23.2m.
Investors hoping for a dividend were out of luck, however.
Rakon chairwoman Lorraine Witten used the full-year result to announce a new dividend policy that will see a profit payout to shareholders assessed on its merits each year as growth opportunities and other market factors are assessed annually.
The firm previously pledged to pay out 50 per cent of its after-tax profit in dividends "if fiscally appropriate".
This year, the board has decided all surplus cash "should be fully allocated to support planned growth and capital expenditure requirements, and therefore no dividend will be paid for the 2022 financial year," Witten said.
New chief executive Sinan Altug said Rakon's order book was strong, but did not offer any profit or venue guidance for FY2023.
Altug told the Herald that while his company had managed Covid "exceptionally" in the year to March, there was still too much pandemic uncertainly to offer an FY2023 forecast at this point - but he anticipated guidance would be given once Rakon had a few trading months under its belt.
More broadly, he said a multi-year re-engineering of Rakon as the company shifted from consumer markets (such as components for smartphones) to higher-margin industrial markets had started to pay off in FY2022.
Altug said key markets for Rakon, particularly 5G mobile network upgrades, were set to continue strong growth in the year ahead.
Others were more mixed, but he saw good long-term prospects. "While our space and defence revenue at this point looks lukewarm, the space industry has been undergoing its own transformation," he said, referencing a shift from a few, large geosynchronous satellites to swarms of low-earth orbiting satellites.
LEO satellite launchers Rocket Lab and Space X are both Rakon customers.
Defence had dipped in FY2022 because of delays with US orders, he said.
Altug said data centres were an emerging growth area. Big tech companies are going through a boom in server farm construction as the shift to hybrid work fuels cloud computing growth. Rakon offers product that helps data centres keep their timing in exact sync as data is exchanged.
Rakon veteran Sinan Altug (right) was promoted from COO to CEO in December, replacing longtime chief executive Brent Robinson (who remains as CTO). Photo / File
Co-founder Brent Robinson - who stepped down as CEO in December but remains as chief technology officer and a director - recently told the Herald that chip shortages caused by Covid had boosted Rakon's margins, and opened doors to new business as rival technology providers felt the squeeze.
Today, Altug said some 99.5 per cent of Rakon's 1000 staff across NZ, India, the UK and elsewhere are vaccinated. Its factories were not being affected by the pandemic.
The CEO said Rakon's ability to design chips inhouse had also helped it to quickly fill the breach when rivals where unable to fill orders - and in one case, step in with a new chipset design after a major manufacturer was hit by a factory fire (Altug said confidentiality clauses meant he couldn't name the companies involved).
