Q4 2026 Structural Monitoring Systems PLC Earnings Call
Speaker #1: FY26 for structural monitoring systems was a very good year. You probably see by the financials that we had record year in terms of sales, profit, and cash flow, and we're really pleased about that.
Speaker #1: A lot of that is generated by the team working really hard on generating more operating profit through the year. But the biggest achievement that I'm proudest of for the team is that we were able to self-finance with a profit that we generated.
Speaker #1: The development of two major programs for our avionics products, and those are products that are going to be introduced in probably fiscal year 2028.
Speaker #1: In fiscal year 2026, the avionics sales were 40% higher than fiscal year 2025, and we expect that trend to be positive in fiscal year 2027, but probably in the 20% growth range.
Speaker #1: But definitely a positive trend. And that trend is driven by the audio system sales being 95% higher than the previous year, and then on the radio sales, radio sales were up 40% versus the previous year, and radios used for the firefighting industry, aerial firefighting aircraft, those radios basically arrived on the market about 2 years ago and in 2 years we've captured about 20% of the market.
Speaker #1: So I think that's really positive, and I would say that one of the things that I'm very proud of at AEM, or Structural Monitoring Systems, is that we are designing and building products that our customers want and need for their aircraft and also their futures.
Speaker #1: Well, I wouldn't say that the investment case is changing. The investment strategy for us is just evolving; in fact, what I would say is that we are setting up SMS to have multiple revenue streams.
Speaker #1: One of them being CBM Technology, another one being the avionics, and then followed by contract manufacturing. And maybe in the future we will invest and buy a product line to add to the SMS family.
Speaker #1: But what I would say specifically about the CBM Technology is that we are getting very, very close to get the FAA approval for the new SMS bulkhead application, and once we get that done, we will have better visibility of the market acceptance of using CBM Technology and other critical applications.
Speaker #1: So it's evolving right now, it's obviously not going as fast as we'd prefer, but we have to go through the steps to make sure that we have safety of flight.
Speaker #1: So we look forward to CBM Technology coming on board with the first approval of the 737NG application later this fiscal year. Well, obviously having no debt is very important for the company.
Speaker #1: I guess more importantly, what I would say is that the not having any debt allows us to do is to put in more investments in the new development projects that are running on currently.
Speaker #1: So the goal for us is that we generate the money, the cash during the year to self-finance our investments in these new projects that I believe are going to be game changers for SMS, and then we reserve our money that we have in the line of credit for maybe other applications, whether it's an acquisition or something other than that that's strategic.
