"Japan continues to show high growth with an increase of 27%. The US had a strong quarter with an increase of 107%, the best quarter since QleanAir launched cleanrooms in the US. EMEA delivered unsatisfactory revenue in the fourth quarter with a decrease of 24%" CEO Sebastian Lindström remarks.
ORDER INTAKE INCREASED BY 50% AND GROWTH IN THE US. UNACCEPTABLE PROFITABILITY IN THE FOURTH QUARTER.
- 120 Net revenue, MSEK
- 59% Recurring revenue
- 3% EBIT margin, adjusted
October – December 2022 in summary
- Net revenue MSEK 120.1 (118.1), currency-adjusted net revenue amounted to MSEK 115.5
- Recurring revenue MSEK 70.8 (65.2)
- Order intake MSEK 109.2 (72.9)
- EBITDA MSEK -9.6 (25.4)
- EBITDA margin -8.0% (21.5%)
- Operating income (EBIT) MSEK -17.7 (17.9)
- Operating margin -14.8% (15.2%)
- Operating income (EBIT), adjusted MSEK 3.5 (17.9)
- Operating margin, adjusted 2.9% (15.2%)
- Earnings per share SEK -1.26 (0.49)
- Cash flow from current operations MSEK 9.6 (22.1)
Significant events during the fourth quarter
- QleanAir wins order for cell research cleanroom project from major US healthcare system
- QleanAir announces major order from the Swedish plastics industry
- QleanAir wins cleanroom order for major US West Coast pharmaceutical compounding company
- Sebastian Lindström is appointed CEO of QleanAir and takes office on November 28, 2022
January – December 2022 in summary
- Net revenue MSEK 455.2 (450.6), currency-adjusted net revenue amounted to MSEK 444.1
- Recurring revenue MSEK 276.8 (262.0)
- Order intake MSEK 407.6 (356.3)
- EBITDA MSEK 59.8 (112.4)
- EBITDA margin 13.1% (25.0%)
- Operating income (EBIT) MSEK 28.6 (83.4)
- Operating margin 6.3% (18.5%)
- Operating income (EBIT), adjusted MSEK 49.8 (83.4)
- Operating margin, adjusted 10.9% (15.2%)
- Earnings per share SEK 0.89 (3.99)
- Cash flow from current operations MSEK 29.7 (104.2)
- The board of directors propose no dividend for the operating year 2022
Significant events after the end of the period
- Study shows QleanAir air cleaners remove over 95% of virus particles in 10 minutes
- QleanAir announces preliminary results for the fourth quarter of 2022
- QleanAir delivered 6.40 billion cubic meters of purified air at the end of the fourth quarter
- QleanAir launches new quiet and energy-efficient air cleaner meeting tough quality requirements
A WORD FROM THE CEO
PROFIT WARNING IN THE FOURTH QUARTER
The foundation of our business, the installed base of products and solutions, delivered a stable revenue of MSEK 120 (118) and a gross margin of 68 (69) percent, adjusted for non-recurring inventory write-downs in the fourth quarter. We issued a profit warning in January 2023 due to large one-off costs and increased costs in general. Gross profit after non-recurring write-downs was MSEK 68 (81). In addition, operating income, EBIT, was negatively impacted during the fourth quarter by non-recurring costs totaling approximately MSEK 5 for CEO changes and organizational changes and a further approximately MSEK 3 in project-related costs. In total, results for the fourth quarter were burdened by MSEK 21 in non-recurring costs. In addition, our operating costs grew faster than our revenues due to investments in marketing, sales, and product development. Adjusted for non-recurring items, the EBIT margin was 3 (15) percent in the fourth quarter. Regarding the project-related costs, we have adjusted and future-proofed certain processes and strengthened the organization. With regards to the underlying increase in costs, we are now doing a total review of our costs.
STEERING QLEANAIR BACK TO PROFITABLE GROWTH
My mission from the Board of Directors is clear. I am to steer QleanAir back to profitable growth. During my first two months, I have met many employees and started my journey to get to know our customers in all regions and product categories. I can ascertain that we have strong products, a knowledgeable and committed team, and very satisfied customers. The awareness of the importance of good indoor air quality has probably never been as high as now. We see in all markets a return to the workplace after the pandemic. Both Japan and the USA show a strong increase in order intake in December and thus enter 2023 with strong momentum. In Europe, we see continued restraint among our customers because of the macroeconomic situation and greatly increased energy costs. Right now, it is primarily energy efficiency that is requested by many of our customers. Our air cleaning solutions are energy efficient and contribute positively to the customers total energy consumption, but here we need to adapt our sales arguments further to get through.
We need to shift into a higher gear, get closer to the customer and work more focused as a team with clear priorities. QleanAir has a scalable business model, our products keep what they promise, and our service offer creates security.
- Customer focus in all parts of our organization is our first priority. This is about getting closer to the customer and thus further enhancing our offering and support to our customers. We will move our entire organization closer to the customer, from the development of our products to the service of the customers solution through our service organization.
- Sales efficiency is the second of our priorities and during 2022 we have expanded our product offering and broadened our sales capabilities. During the fourth quarter, we signed almost 300 new customer contracts. To get us back on the growth journey, our work with customers and sales orientation needs to become even more focused. We will continue to gain market share in the healthcare segment in the US. We will continue the success of Air Cleaners in Europe, without losing focus on our strong base in Cabin Solutions. As the market leader in Japan, we are concentrating on growing the addressable market for Cabin Solutions both segmentally and geographically, in parallel with building the market for our Air Cleaners.
- Our third priority is cost control. This does not mean that we should be afraid to take on short-term costs that will lead us towards our financial goals, but the current cost level is under scrutiny to suit the current situation.
We know where we are going. The calendar for 2023 is already booked. We have great opportunities to create value. Our business model is circular, that is our products have a long life with our customers through our strong service model and at the end of the contract, we refurbish the product to give it a new life with the next customer.
In summary, we clean indoor air by reducing harmful particles. The working environment for people is improved. Furthermore, the quality of customers' products and the efficiency of their processes is improved. We will work systematically to return to profitable growth. You are invited to our presentation today at 10 am, see more information below. Let's get started.
Solna, February 10, 2023
Sebastian Lindström, VD, QleanAir AB
INVITATION TO THE PRESENTATION OT THE FOURTH QUARTER REPORT AND YEAR END RESULT 2022
QleanAir invites to teleconference and audio cast on February 10th, at 10.00. The company’s CEO, Sebastian Lindström, and CFO, Henrik Resmark, present the interim report for the fourth quarter and the year-end report 2022 in English.
The presentation will start at 10 am and can be joined via the web or by telephone. It will be available on demand on the same weblink shortly after the event and on our website.
Join us via the web https://ir.financialhearings.com/qleanair-holding-q4-2022. Register for direct access to the webcast.
To participate via conference call, register via the link below for phone number and conference ID. Via the telephone conference, there is an opportunity to ask questions orally.