Judges Scientific PLC (JSCIF) (H1 2026) Earnings Call Highlights: Revenue Slumps 21% but Order ...

Negative Points

• H1 revenue declined by 21% year-over-year, or 13% on a like-for-like basis, due to challenging market conditions.

• Adjusted earnings per share plummeted 72% to GBP0.39, reflecting high operational leverage and significant revenue decline.

• Adjusted operating profits dropped by two-thirds, as the high-margin business model amplifies the impact of lower revenue.

• Continued uncertainties in US research funding and delays in China's tax exemption processes negatively impacted orders and revenue.

• Offshore wind investments remained postponed, with no expected improvement in the near term, affecting companies like GDS Instruments.

• The next Geotek coring expedition is now not expected before 2028, delaying a significant revenue opportunity.

• Return on total invested capital (ROTIC) declined to around 13%, well below historical levels, due to weaker performance.

• Adjusted net debt increased by GBP3 million, and gearing rose as a consequence of the weaker H1 performance.

• Dividend cover for the interim dividend is only 1.1, which is not sustainable in isolation and is driven by the low H1 result.

• Execution risks remain for H2, with a significant Q4 weighting in revenue and potential delays in high-value instrument shipments.

Q & A Highlights

Q: Once the balance sheet has deleveraged further, has the board considered adding opportunistic share buybacks alongside the 10% dividend progression, particularly during quieter M&A periods? A: CFO Bradley Ormsby stated that share buybacks have been considered and are seen as a viable use of capital allocation, but not necessarily at the moment. He noted that using increased debt for buybacks is not an excellent use of capital currently, and the group needs to deleverage with improved performance first. CEO Tim Prestidge added that while buybacks have been increasingly raised by investors, the board concluded it was not the most effective way of returning cash to investors, though special dividends have been used in the past and may be considered again.

Q: You reaffirm the current full year market expectations. Could you please explain the key assumptions behind this guidance, particularly regarding second half revenue, operating margins and Q3 order intake? A: CFO Bradley Ormsby explained that Q3 order intake has been in line with expectations, providing a higher volume to deliver in Q4. To meet market expectations, the group needs to deliver 160 pence in H2, which it has done before. The lower cost base in H2 compared to last year, benefits from the Patent Box scheme reducing the effective tax rate, and operating leverage on higher volumes with good visibility are key assumptions. He noted it is very much Q4 weighted and not without risk, but the orders are largely in hand.

Q: You noted a GBP2 million reduction in the cost base of underperforming businesses during H1. How much of this represents permanent structural overhead reduction versus temporary variable cost containment? And did any of these measures require cutting back on active R&D or engineering capacity? A: CEO Tim Prestidge stated that the majority of the cost reduction related to headcount costs at underperforming businesses, with some structural reductions made where previous investments had not delivered expected growth. Group Commercial Director Ian Wilcock added that at FTT and Armfield, cost reductions were done in a way that protected core innovation, allowing new product launches while still reducing the overall cost envelope.

Q: What share of your North American revenue is directly tied to federally funded labs versus commercial customers? Are those labs telling you 2027 budgets are recovering, or should we model North America at the current lower base? A: CFO Bradley Ormsby explained that the group cannot measure this precisely, but historically around half of revenue comes from the academic world and around a sixth from indirectly financed entities like the NIH. In the US, somewhere between half and two-thirds of revenue is affected by federal funding. Last year, around 25% of total revenue was generated in the US, with about two-thirds of that exposed to federal funding uncertainties. He could not give a clearer number due to the complexity of funding sources.

Q: Of the revenue lost in China this half, how much do you think comes back versus is gone for good? A: CFO Bradley Ormsby said the vast majority is about delay rather than lost business. He cited a significant distributor order expected in H1 that has been pushed to Q4 due to the 13% tax exemption process. He does not believe much has been lost, but delivery of existing orders and routine orders have been pushed to the right, with some possibly coming in 2027. Progress is happening as existing orders are now being asked to be delivered.

Q: Where is the order intake inflection coming from? Is it universities or industrial activity? A: CEO Tim Prestidge said it is a real mix, with pretty big-ticket items across multiple businesses and sectors, including scientific instrumentation, batteries, and semicon. He emphasized this is not a general rising tide or recovery in the scientific instrumentation market, but rather specific high-value opportunities that have been in the pipeline coming through. Some high-value scientific instrumentation is still being ordered from the US where research groups are finding ways to secure funding.

Q: You've explained why North America is down, but Europe is down even more. So why is that, and when do you expect Europe to recover? A: CEO Tim Prestidge explained that Europe was down 20% in H1 versus North America down 7%. The decline in Europe was relatively broad, including at OEMs that supply into the US, and there was a significant impact from a one-off non-recurring industrial order last year that did not repeat. North America benefited from region-specific non-academic recovery in order intake at some businesses, which offset the federal funding challenges.

Q: Aside from recent disruption, what impact, if any, will the new Chinese procurement processes have on the group in the medium term? A: CEO Tim Prestidge stated the new processes are replacing previous ones and are not expected to have a long-term impact. The impact has been delays, not lost orders, with shipments postponed and orders delayed until processes resolved. Group Commercial Director Ian Wilcock agreed, noting bidding processes have been frozen by many customers, but there is no indication orders will drop off, and a decent recovery is anticipated next year in the Chinese market.

Q: The delay in a new coring expedition seems longer than usual. If that is correct, what is the reason for this? A: CEO Tim Prestidge explained that the customer has had funding approved but elected to reverse the order of projects, so the coring expedition will follow another expedition. Geotek continues to follow other opportunities in a vibrant field, but no coring expedition is currently expected in 2027. CFO Bradley Ormsby added these projects are incredibly expensive, usually tens of millions, and timing is out of the group's control, though Geotek is the only company that can do the pressure coring for gas hydrates.

Q: Are current markets and uncertainties leading to lower valuation multiples for potential acquisition targets in the scientific instruments niche? A: CEO Tim Prestidge said no, that is not the experience. The group looks to acquire successful businesses to keep forever, which is a high bar. Owners of successful businesses coming off a tough year may have a number in mind relative to prior performance, which can imply higher rather than lower multiples. The group is seeing a greater level of quality businesses coming into active deal opportunities, but no reduction in multiple expectations, and remains able to attract acquisitions within its disciplined multiples.

Q: Does the improved order intake from minus 12% in H1 to minus 1% year to date imply Q3 orders are roughly plus 20%?

For the complete transcript of the earnings call, please refer to the full earnings call transcript .