Hercules plc (LON:HERC) Chief Executive Officer Matt Hamblin caught up with DirectorsTalk to discuss the group’s surface coating technology, growth across energy and aerospace, improved trading performance, and plans to double production capacity as it builds momentum into FY27.
Q1: Can you remind investors what Hardide does?
A1: Hardide is a material science surface treatment business. Our primary technology is low temperature Chemical Vapour Deposition (CVD) which accounts for 95% of revenue. We also have more traditional treatment capabilities such as nickel plating, electroless nickel plating, passivation, laboratory, and testing services as well as electropolishing.
We are a solutions business; we solve problems and outperform alternative coatings in demanding environments. Our primary solution is erosion protection, coupled with corrosion and wear protection as well as chemical resistance. Rarely are customers seeking to solve one single problem and Hardide given it’s hard, pore free, dense but ductile structure can be used to solve combined problems on a wide variety of metals. Hardide is a non-line of site process, meaning our CVD process is very receptive to complex geometries and tight tolerances.
We operate from two locations, our HQ is in Bicester Oxfordshire alongside our UK manufacturing facility, we also operate a facility in Martinsville Virginia. Both facilities have very similar capabilities to support volume production processing.
Q2: With which particular sectors does Hardide operate?
A2: As a general statement, Hardide is sector agnostic, we can solve problems with our patented technology in all sectors, a good problem for Hardide to solve is determined by the failure modes I mentioned earlier as well as the operating environment of the component we are asked to apply our technology to.
Currently, our main sectors are Energy, Aerospace, and Industrials. We have seen significant growth in the Energy sector over the past 12 months, primarily applying CVD to parts to help prevent erosion. We announced in December 2024 a new Aerospace contract and that project has been ramping up production this year and will continue to increase further as we go into 2027.
The trading performance has improved considerably and the recent trading update states that results will be ahead of market expectations – what do you put this down to?
There are three factors driving our recent success and all of them are sustainable as we move forward:
Firstly, we have gained a better understanding of our forward orderbook and secured new repeat business which we believe will underpin revenues for years to come.
We have also taken steps to better understand the cost base in the business meaning we are better equipped to maximise efficiency even with the inevitable inflationary pressures of today’s economy.
Thirdly, our operational performance has been exceptional, huge credit should go to the operations teams in both the UK and US for all their hard work in delivering 100% revenue growth this year. Our delivery, quality, and overall responsiveness KPI’s are ahead of where customers demand them, this builds both customer confidence and internal confidence in our ability to sustain the growth we have seen and expect to continue to see.
Q3: Hardide’s shares have had a considerable performance, why do you think investors have shown so much interest?
A3: It is good to see investors showing confidence in a UK manufacturing business. I think over the last two years we have consistently met, and in fact achieved ahead of time, our stated objectives in terms of revenue, profitability, and cash.
We said we would double revenues from FY24 in three years, we are on track to treble those revenues in two years. These consistent results are clearly building confidence, I hope current investors stay on board, new investors join as we set out on our newest objective in FY27 which is to double FY26 revenue over the medium term.
Given the market guidance recently provided for FY27 this objective is a very realistic target given our current momentum, opportunity pipeline, and recently announced capital investment plans.
Q4: What can investors expect from Hardide in the remainder of the year?
A4: This year will see us complete a record year of revenue for the current financial year ending on the 30th September aligned to our recently upgraded market forecast. We have existing order cover from our North American Oil & Gas customer, and we will continue to ramp up production of our new aerospace contract as we go into Q1 of our new financial year and end of the calendar year.
Towards the end of 2026, we will also complete the previously announced upgrade of the Martinsville facility, with a new effluent management system and pre-treatment line installed.
By the end of Q1 2027, we will complete our preparations for the arrival of our new processing reactors in both the UK and US facilities. The new reactors are set to arrive in Q2 2027 and be operational by Q3 2027, this will double our current capacity to circa £40m.
In summary, I expect Hardide to continue to deliver on its commitment into FY27 and I am looking forward to what the next 12 – 18 months has to offer in terms of further growth and momentum.
