QLEANAIR INTERIM REPORT Q2, 2020 – STRONG GROWTH AND IMPROVED PROFITABILITY
“QleanAir has a strong market position in indoor air cleaning and presents a strong and profitable growth for the second quarter. Sales increased 26% to SEKm 137.0 (108.9) and the organic growth rate amounted to 24%. The EBITDA-margin increased to 23.6% (23.0) which resulted in a 29% increase in EBITDA to SEKm 32.4 (25.1). The cash-flow increased to SEKm 34.9 (20.2) in the quarter. The order intake was affected by the Covid-19 pandemic and decreased with 29% to SEKm 62.4 (87.6). Our increasing share of recurring revenues gives us a good resilience in times with more difficult market conditions. We deliver another strong quarter for Cabin Solutions in Japan and we continue our investments in Facility Solutions and Room Solutions. During the second quarter we launched a new product for the food and beverage industry.” statement from the CEO Andreas Göth.
April – June 2020 in Summary
- Order intake SEKm 62.4 (87.6)
- Sales SEKm 137.0 (108.9)
- EBITDA SEKm 32.4 (25.1)
- EBITDA-margin 23.6% (23.0)
- Operating profit (EBIT) SEKm 25.3 (19.8)
- EBIT-margin1 18.5% (18.2)
- Net profit SEKm 17.4 (8.0)
- Earnings per share2 SEK 1.17 (0.60)
- Cash-flow from operations SEKm 34.9 (20.2)
January – June 2020 in Summary
- Order intake SEKm 185.9 (174.0)
- Sales SEKm 281.7 (214.0)
- EBITDA SEKm 70.7 (53.9)
- EBITDA-margin 25.1% (25.2)
- Operating profit (EBIT) SEKm 56.7 (43.4)
- EBIT-margin1 20.1% (20.3)
- Net profit SEKm 35.2 (18.6)
- Earnings per share2 SEK 2.37 (1.40)
- Cash-flow from operations SEKm 30.1 (38.3)
Significant events
- The board estimates that the outbreak of the Corona virus will affect sales and the financial development. Management and the Board actively monitor the development and take regular measures to limit the negative effects on the business.
- On May 13 the Annual General Meeting decided, among other things, to appoint two new board members of which Bengt Engström was elected new Chairman.
- On June 26 the Extra General Meeting decided on a new incentive program with a maximal dilution of 222 888 share.
1 For definition of alternative key ratios see page 19. TSEK means SEK in thousands. SEKm means SEK in millions.
2 Earnings per share after full dilution SEK 1.15 (0.60) second quarter and SEK 2.34 (1.40) first half year.
EBITDA 2019 and 2020 is affected by IFRS 16 that is applied from January 1, 2019.
A word from the CEO
Strong and profitable growth in the second quarter
QleanAir continues to grow and increased the sales with 25.8% to SEKm 137.0 (108.9), adjusted for currency effects the organic growth amounted to 24.1%. The EBITDA-margin increased to 23.6% (23.0) and the EBITDA result increased to SEKm 32.4 (25.1), at the same time as the operating cash-flow increased to SEKm 34.9 (20.2) and the debt/equity ratio decreased. Globally, sales increased strongly in APAC and Americas and decreased slightly in Europe. The lockdowns due to the pandemic negatively affected the order intake which decreased 29% and amounted to SEKm 62.4 (87.6) during the second quarter. Our business model with a focus on long-term rental contracts and a high proportion of recurring revenues, 47% (43) in the second quarter, gives us good resilience to withstand challenging market conditions.
Covid-19 – closed markets affecting sales and order intake
The Covid-19 pandemic will trigger increasing interest in indoor air cleaning in the long term. In the immediate term, we are keeping a tight control on costs and cash-flow to ensure flexibility and to be able to quickly take advantage of business opportunities and manage challenges that the pandemic brings. The most important markets for QleanAir are Northern Europe, Japan and USA. The sales mix in the second quarter was 37.8 percent Europe, 55.1 percent APAC and 7.1 percent the Americas. Growth for QleanAir is dependent on open and functioning markets to enable us to drive active sales work. Closed markets affect order intake, deliveries and revenues immediately. At the end of March, we saw severe lockdowns in many states in the US, which forced us to temporarily freeze installations for Room Solutions. The US temporarily opened again which meant we could perform installations in the second quarter. In Northern Europe, most markets were closed in April and May. In June, we saw a gradual opening of markets in Northern Europe. Japan also implemented restrictions that impacted us in the second quarter. We expect markets to be volatile with rapid changes.
Investment in Facility Solutions
QleanAir has a strong position within indoor air cleaning. We continue our investments to develop new solutions for the indoor environments. In the first quarter, we launched a product modification within Facility Solutions with a HEPA-filter to meet increased demand for clean and safe indoor air, for example, in hospital environments and office environments. Facility Solutions is an investment area for us in Europe. During the second quarter, we launched a model modified for the food and beverage industry. The food and beverage industry have tough requirements when it comes to design, choice of materials and filter efficiency. We offer our customers a market leading total solution to assure high air quality and the safe processing of food. Product launches within Facility Solutions are scheduled this autumn. Sales increased 10.5% and amounted to SEKm 11.6 (10.5).
Room Solutions continued to develop positively in the second quarter. Sales amounted to SEKm 12.0 (7.6), increase of 57.9%. The order intake was negatively affected by the pandemic due to lockdowns in several large states in US.
The health promotion act that came into force in Japan in April this year continued to benefit sales in the second quarter. The growth in APAC January-June was exceptionally strong. The Sales for Cabin Solutions increased 25% and amounted to SEKm 113.4 (90.7).
Large and broad customer base – back to work
QleanAir has a large and broad customer base within the office segment with major global customers in Northern Europe and Japan. Today, we have a broad offer of solutions for indoor air cleaning in offices within the product categories Facility Solutions and Cabin Solutions. In June, we launched a sales campaign in a number of European countries on the theme “back to the office”. Offering good air quality and a good indoor environment in offices gives companies the opportunity to get their employees back working together in offices again.
Outlook
Our long-term growth strategy is firmly focused on developing and growing our new product categories, Facility Solutions and Room Solutions. In the short term, we are trying to lessen the effects of the ongoing pandemic. In the longer term, we are convinced that the pandemic will increase the need for clean, safe and controlled indoor environments and good air quality. As of 30 June 2020, QleanAir delivered 3.75 billion m3 of cleaned indoor air per month, a 17 percent increase compared to June 2019. As an organization, the Group continues to demonstrate its capacity to live up to its values and the challenges we are facing, something that makes me both proud and optimistic looking forward in the long term. I would like to thank our customers, employees and partners in these very challenging times.
Solna, Sweden, August 19, 2020
Andreas Göth, CEO QleanAir Holding AB
PRESENTATION
QleanAir invites to teleconference/audiocast on August 19, 2020 at 9 am CET. The company’s CEO, Andreas Göth, and CFO, Henrik Resmark, will present the second quarter 2020 results in English with presentation slides in English.
Here is the link to follow the presentation online: https://tv.streamfabriken.com/qleanair-holding-q2-2020
Telephone numbers for dial-in:
SE: +46856642703
UK: +443333009032
US: +18332498407