Structural Monitoring Systems plc has raised $8.7 million and implemented a major cost restructuring, positioning itself for profitable growth with strong sales momentum in its avionics and sensor technology segments.
- Completed $8.7 million capital raise including institutional placement and SPP
- Achieved over $2.5 million annualised cost savings through operational restructuring
- Incremental Forest Radio sales exceeded $2 million in the December quarter
- Advanced FAA certification for CVM sensor technology with Boeing collaboration
- Ongoing negotiations for a significant 150-unit CalFire radio order
Capital Raise and Financial Foundation
Structural Monitoring Systems plc (ASX: SMN) has fortified its financial position with a successful capital raise totaling $8.7 million before costs. This comprised a $5 million institutional placement, a $2.2 million Security Purchase Plan (SPP) that exceeded its target, a $0.2 million director placement, and a $1.3 million placement in early January to Drake Private Investments LLC, a long-term shareholder. Approximately 80% of these funds are earmarked for new investments, including product development and manufacturing expansion focused on high-margin avionics products.
Operational Restructuring and Cost Savings
The company has undertaken a substantial restructuring of its operating costs, particularly within its wholly owned subsidiary AEM. This initiative is projected to deliver annualised savings exceeding $2.5 million, with early benefits already materializing in the current quarter. The restructuring involves streamlining operations, reducing staff and production costs, and reallocating capacity towards higher-margin avionics products, signaling a strategic pivot to enhance profitability.
Sales Growth and Market Momentum
December’s year-end sales campaign yielded incremental Forest Radio sales surpassing $2 million, underscoring strong market demand. Additionally, AEM Avionics recorded a 21% revenue increase year-on-year for the quarter, reaching $3.49 million. The company is also advancing negotiations with CalFire for a significant order of 150 radios, a deal that would further cement its presence in the aerial firefighting sector. CalFire’s recent high-profile role in responding to the Los Angeles fires has spotlighted the critical importance of SMS’s communication products.
Technological Progress and Regulatory Milestones
Structural Monitoring Systems continues to make headway with its CVM™ sensor technology, designed for Aft Pressure Bulkhead inspections. The company has achieved full technical approval from Boeing and is working closely with the FAA to finalize certification requirements. While the FAA has mandated concurrent Low Frequency Eddy Current inspections temporarily, SMS remains confident of securing full FAA approval, which would unlock broader adoption of its innovative sensor solutions across the aviation industry.
Outlook and Strategic Focus
Chairman and CEO Ross Love expressed optimism about the company’s trajectory, highlighting the improved revenue run rate and realised cost savings that are expected to deliver stronger free cash flow than initially forecast. The company plans to leverage its strengthened balance sheet to invest in new product development and potential acquisitions. With a cash balance of $7.09 million at quarter-end and additional funding secured in January, SMS is well-positioned to capitalize on growth opportunities in the special mission aviation and sensor technology markets.
Bottom Line?
Structural Monitoring Systems is executing a decisive turnaround, with capital, cost discipline, and product momentum setting the stage for sustained growth.
Questions in the middle?
- Will the FAA grant full certification for the CVM™ sensor technology and when?
- How will the potential CalFire order impact SMS’s revenue and margins in 2025?
- What new product investments or acquisitions might the company pursue with its strengthened balance sheet?