QLEANAIR INTERIM REPORT Q1 2023 – ORGANIC GROWTH AND IMPROVED CASH FLOW
"The priority is to reach our financial targets. January-March 2023 shows that we are on the right track and we will improve further. Japan continues to show high growth, increasing by 23% in the quarter. The US had a strong quarter with an 85% increase. Meanwhile, EMEA delivered unsatisfactory revenue in the first quarter. We are now increasing our focus on boosting EMEA's order intake and revenue. We are growing organically and revenue increased by 5%," CEO Sebastian Lindström remarks.
ORGANIC GROWTH AND IMPROVED CASH FLOW
January–March 2023 in summary
- Net revenue MSEK 121.0 (115.4), currency-adjusted net revenue amounted to MSEK 118.2
- Recurring revenue MSEK 74.5 (69.0)
- Order intake MSEK 114.1 (117.0)
- EBITDA MSEK 24.8 (25.2)
- EBITDA margin 20.5% (21.8%)
- Operating income (EBIT) MSEK 16.6 (17.6)
- Operating margin 13.7% (15.2%)
- Adjusted operating profit MSEK 19.2 (17.6)
- Adjusted operating margin 15.9% (15.2%)
- Earnings per share SEK 0.68 (0.92)
- Cash flow from current operations MSEK 11.0 (-0.2)
Significant developments during the first quarter
- Study shows QleanAir air cleaners remove over 95% of virus particles in 10 minutes
- QleanAir made a preannouncement of results for the fourth quarter of 2022 as results deviate negatively from market expectations
- QleanAir launches a new quiet and energy efficient air cleaner, the FS 35, which meets tough quality requirements
- An extraordinary general meeting has been held in QleanAir AB where a long-term incentive program for the CEO was decided upon.
Significant events after the end of the period
No significant events after the end of the period.
A WORD FROM THE CEO
GROWTH AND PROFITABILITY
Growth and profitability are our goals and we will achieve this through our three priorities; Customer Focus, Sales Efficiency and Cost Control.
Customer focus
In March and April, we conducted workshops with customers and our own sales and service organization in all regions – APAC, EMEA and Americas – to lay the foundations for an updated strategic plan. During these workshops, we reviewed our customer offering in order to identify future opportunities on the product side and in our commercial approach. The meetings were extremely rewarding and appreciated and will lead to a greater involvement of both customers and employees in our strategic plan.
Sales efficiency
During the first quarter, we streamlined and systematized our follow-up of sales efforts and sales, starting the journey of simplifying and streamlining the sales process. The aim is to get more out of the existing salesforce. We have separated out our largest market in Europe, Germany, which now reports directly to me. This is to make room for increased focus from existing sales management on the other ten countries in Europe. All markets in Europe must deliver increased sales.
Cost control
In February, we made an adjustment to our central costs. On February 23, we gave notice to five positions. These notices exclusively affected our central organization. We took the cost of this reduction in the first quarter. Our objective with this reduction is to make room for regional investments in sales and marketing, closer to our customers in our markets. This shift will allow us to be more accurate in determining which activities actually contribute to increased sales.
BUSINESS MODEL
The foundation of our business, the installed base of products and solutions, delivered stable revenue of MSEK 121 (115) and a gross margin of 71% (72%). The installed base increased by 5%. Our recurring revenue increased by 8%.
We know where we are going. We have great opportunities to create value. Our business model is circular, i.e. our products have a long life with our customers through our strong service model, and at the end of the contract we recondition the product to give it a new life for the next customer.
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.
OUTLOOK
In Europe, we continue to see customer restraint due to the geopolitical situation and increased energy costs. Right now, many of our customers are mainly interested in energy efficiency. Our air cleaning solutions are energy efficient and contribute positively to the customer's overall energy consumption, and this is a message we need to get across by further adapting our sales arguments.
In Japan, we have a positive outlook for 2023 with a clear strategy to continue focusing on customer segments and prioritizing efforts to increase sales in Air Cleaners as well.
In the US, we see an increasingly strong sales pipeline being converted into order intakes and sales. Focus is on continuing this dedicated sales effort in order to contribute to the Group's financial development to a greater extent than before.
Finally, I would like to thank all our dedicated employees, our customers and suppliers for a great collaboration.
Solna, May 10, 2023
Sebastian Lindström, CEO QleanAir AB