Exel Composites' Half Year Financial Report Q1-Q2 2024: Good improvement in Q2 order intake, revenue and profits − Strengthened financial position after rights issue and new financing agreement

Q2 2024 in brief

• Order intake increased by 4.0% to EUR 26.4 million (Q2 2023: 25.4)
• Revenue increased by 4.7% to EUR 26.6 million (25.4)
• Operating profit increased to EUR 1.2 million (-0.2) and operating profit margin to 4.4% (-1.0%)
• Adjusted operating profit increased to EUR 1.4 million (0.1) and adjusted operating profit margin to 5.2% (0.3%)
• Earnings per share was EUR 0.02 (-0.08)
• Gross proceeds of approximately EUR 21.8 million from the successful rights issue and a new financing agreement of EUR 52.4 million strengthen financial position

Q1-Q2 2024 in brief

• Order intake increased by 6.4% to EUR 55.0 million (Q1-Q2 2023: 51.7)
• Revenue decreased by 7.8% to EUR 50.0 million (54.2)
• Operating profit increased to EUR 0.6 million (-0.5) and operating profit margin to 1.2% (-1.0%)
• Adjusted operating profit increased to EUR 0.8 million (0.1) and adjusted operating profit margin to 1.6% (0.1%)
• Earnings per share was EUR 0.01 (-0.25)

Guidance for the full year 2024 (unchanged)

Exel Composites expects revenue to increase and adjusted operating profit to increase significantly in 2024 compared to 2023. (Guidance published on 16 February 2024.)

Paul Sohlberg, President and CEO:

In Q2 2024, we continued our track of improvements. This was the third consecutive upward quarter in revenue and the second in adjusted operating profit. We achieved revenue growth both from the comparison period last year and from the previous quarter. We made significant improvement in operating profit and turned our first half clearly positive.

I am very proud of the work we have done in the first half of 2024 to strengthen our capital structure and accelerate our transformative growth strategy launched in late 2023.  A major highlight of the review period was the oversubscribed rights issue, which I consider a strong indication of support for our company and the direction we have chosen to take. In total, we received subscriptions for approximately 141 per cent of the offer shares, contributing gross proceeds of approximately
EUR 21.8 million.

Following the offering, Exel had 8,425 shareholders at the end of the reporting period, comprising both institutional investors (55%) and households (45%). We saw the vast majority of our prior shareholders stay as shareholders after the rights issue, being joined by many new owners as well. I would like to extend my warmest thanks to all shareholders who participated in our rights issue for their strong support and welcome you all on our transformative journey!

Our new financing agreement of EUR 52.4 million entered into force in June. With the financing agreement and the funds raised in the rights issue, we are now able to swiftly advance our strategic initiatives that we have communicated earlier. These include furthering the execution of the strategic factory network optimization plan and investments to support the company's growth, among others. The equipping of our manufacturing facility in Goa, optimized for serving wind power industry customers in India, is well underway and production is due to start during 2024. The strategic review of the Belgian factory is also progressing according to plan, and we are proceeding to the action phase.

Order intake increased, markets developed in line with our expectations
Similarly, it was pleasing to see that our efforts in the customer interface continued to pay off. Our order intake continued to increase, amounting to EUR 55.0 million for the first half. As a result, our order backlog at the end of June stood at EUR 34.5 million, which is 31% higher than the same period last year.

Markets developed in line with our expectations. We had estimated that the first half of this year would be busier than the previous six months, and in the reporting period, we saw increased customer activity in all our strategic industries, except for the construction market, where the situation is still challenging.

We signed several important new customer agreements in the first half, including a multi-year agreement with a major wind turbine manufacturer for the supply of carbon fiber planks for spar caps from our new Indian factory. In addition, we signed a multi-year agreement with Foton Bus and Coach company to deliver pultruded parts to electric buses, as well as a partnership agreement with Flying Whales airship company to design carbon fiber tubes to the airship's fuselage.

Looking forward we are working on significant new customer deals in line with our strategic focus areas and hope to announce them in due time. With that said, the macroeconomic sentiment remains indecisive and has even shown some signs of cooling off during the summer. Uncertainty about the global economic outlook and geopolitical situation continues. We expect customer activity to remain at the current level in the second half of 2024, and it will continue to require daily efforts from us to maintain good development.

Revenue increased, significant improvement in operating profit
The increase in order intake resulted in revenue growth in the second quarter. Revenue for the quarter grew by 4.7% from the comparison period coming in at EUR 26.6 million and was at EUR 50.0 million for the first half (H1 2023: 54.2).
Revenue in the second quarter grew in nearly all customer industries, mainly excluding the Energy sector, since we are still preparing to ramp up production of certain wind products in India.

The increased order intake and revenue, combined with actions to optimize capacity, cost control and operational measures, elevated our Q2 2024 adjusted operating profit margin to 5.2% (0.3%) and our adjusted operating profit to EUR 1.4 million (0.1).

The profitability improvement in Q2 2024 speaks well to the value generation potential Exel has as we increase the utilization rates of our manufacturing capacity. We are still far below the utilization rates and order intake levels we target. However, it is encouraging to see that we are on the right path. We expect profitability to further improve over time with higher utilization rates, which we aim to achieve by ramping up new customer products and further optimizing production. Both actions are, however, expected to require investment and to incur additional costs in the short term.
As a result of our good progress in the first half, we had a positive operative cash flow of EUR 2.6 million. In the first half of 2024, Group's financial position improved significantly with change in liquid funds being positive by EUR 21.3 million due to the successful rights issue.

Outlook for 2024 unchanged
We reiterate our guidance published in February 2024: Exel Composites expects revenue to increase and adjusted operating profit to increase significantly in 2024 compared to 2023.

New operating model in place
In early 2024, we introduced a new operating model based on two business units: Engineered Solutions Business Unit and Industrial Solutions Business Unit. The second quarter was the first full quarter with our new operating model being fully operational. We now report revenue for the two business units, in addition to Group revenue by customer industry.

Revenue in the Engineered Solutions Business Unit was
EUR 41.5 million in the first half of 2024. Markets picked up and the demand developed favourably in most of the customer industries. There was especially high demand in defense and various tube applications.

In the USA, the Engineered Solutions Business Unit secured several new customers, particularly in the building and infrastructure sector. Many orders received in the first half are now in production and expected to become revenue in the latter half of 2024.

Revenue in the Industrial Solutions was EUR 8.5 million in the first half. Demand was cautiously positive, and there were signs of markets picking up. However, some customers continued to postpone orders and consume material inventories. New customers secured in the first half are expected to positively impact volumes starting in late 2024.

If I may, I would like to invite you to have a look at the business reviews in this report to get more familiar with our new business units and their activities.

Consolidated key figures

Q2 Q2 Change Q1-Q2 Q1-Q2 Change Q1-Q4
EUR thousand 2024 2023 % 2024 2023 % 2023

Revenue 26,589 25,399 4.7 49,954 54,202 -7.8 96,815
Operating profit 1,159 -249 564.9 604 -532 213.5 -4,863
% of revenue 4.4 -1.0 1.2 -1.0 -5.0
Adjusted 1,374 65 2,016.6 819 71 1,059.7 -2,446
operating profit
1)
% of revenue 5.2 0.3 1.6 0.1 -2.5
EBITDA 2,605 1,474 76.6 3,509 2,953 18.8 3,832
Adjusted EBITDA 2,819 1,788 57.7 3,724 3,556 4.7 4,059
1)
Profit before 836 -696 220.0 228 -2,172 110.5 -8,254
tax
Profit for the 573 -935 161.2 -26 -3,073 99.2 -9,309
period
Profit for the 669 -893 175.0 130 -2,983 104.4 -9,130
period excluding
non-controlling
interest
% of revenue 2.5 -3.5 0.3 -5.5 -9.4
Shareholders' 37,230 24,203 53.8 37,230 24,203 53.8 17,687
equity
Interest-bearing 49,129 50,036 -1.8 49,129 50,036 -1.8 43,790
liabilities
Cash and cash 32,431 18,986 70.8 32,431 18,986 70.8 10,952
equivalents
Net interest 16,699 31,050 -46.2 16,699 31,050 -46.2 32,838
-bearing
liabilities
Net debt to 3.9 3.1 24.8 3.9 3.1 24.8 8.1
adjusted EBITDA
2)
Capital employed 86,359 74,239 16.3 86,359 74,239 16.3 61,477
Return on 8.5 -14.3 159.3 -0.2 -22.5 99.2 -38.7
equity, %
Return on 6.4 -1.2 654.2 1.8 -1.3 242.1 -6.8
capital
employed, %
Equity ratio, % 32.4 23.5 38.2 32.4 23.5 38.2 20.9
Net gearing, % 44.9 128.3 -65.0 44.9 128.3 -65.0 185.7
Net cash flow 3,606 5,310 -32.1 994 2,520 -60.6 4,445
from operating
activities
Net cash flow -424 -1,118 -62.1 -856 -1,597 -46.4 -3,076
from investing
activities
Capital 375 1,314 -71.5 815 2,075 -60.7 3,523
expenditure
% of revenue 1.4 5.2 1.6 3.8 3.6
Research and 919 984 -6.6 1,996 1,932 3.3 3,711
development
costs
% of revenue 3.5 3.9 4.0 3.6 3.8
Order intake 26,404 25,393 4.0 55,018 51,725 6.4 98,142
Order backlog 34,487 26,366 30.8 34,487 26,366 30.8 29,765
Earnings per 0.02 -0.08 130.1 0.01 -0.25 102.5 -0.77
share, diluted
and
undiluted, EUR
Equity per 1.26 2.01 -37.61 1.79 2.01 -10.93 1.47
share, EUR
Average share 0.49 3.94 -87.6 0.70 4.44 -84.2 3.60
price, EUR
Average number 29,570 11,854 149.5 20,712 11,854 74.7 11,854
of shares,
diluted and
undiluted, 1,000
shares 3)
Employees, 622 673 -7.7 622 698 -10.9 667
average
Employees, end 621 646 -3.9 621 646 -3.9 623
of period

1) Excluding material items affecting comparability, such as restructuring costs, impairment losses and reversals, and costs related to planned or realized business acquisitions or disposals

2) Last 12 months' adjusted EBITDA

3) As a result of Exel's rights issue completed in June 2024, the total number of shares in the company  increased by 94,831,552 from 11,896,843 to 106,728,395.

Revenue by business unit

Q2 Q1-Q2
EUR thousand 2024 2024
Engineered Solutions BU 22,359 41,478
Industrial Solutions BU 4,228 8,474
Other 2 2
Total 26,589 49,954

Revenue by customer industry

Q2 Q2 Change Q1-Q2 Q1-Q2 Change Q1-Q4
EUR thousand 2024 2023 % 2024 2023 % 2023
Buildings and 5,530 5,031 9.9 10,456 10,651 -1.8 18,539
infrastructure
Industrial 4,173 3,402 22.7 7,625 8,837 -13.7 15,358
Energy 4,455 5,398 -17.5 9,881 11,791 -16.2 22,108
Transportation 4,969 4,005 24.1 9,014 8,384 7.5 16,268
Other 7,462 7,563 -1.3 12,978 14,539 -10.7 24,541
Total 26,589 25,399 4.7 49,954 54,202 -7.8 96,815

Vantaa, 15 August 2024

Exel Composites Plc

Board of Directors

Financial results briefing

Exel Composites will hold a financial results briefing regarding the Q1-Q2 2024 results today at 12:30 EEST. To participate in the online event, please register in advance by sending an email to investor@exelcomposites.com.

This release is a summary of Exel Composites' Half Year Financial Report January-June 2024. The complete report is attached to this release as a pdf file. It is also available at the company's website at exelcomposites.com.

For further information, please contact:
 

Mikko Rummukainen, CFO

tel. +358 20 754 1335

Lilli Riikonen, Head of Investor Relations

investor@exelcomposites.com

tel. +358 50 351 1128

 

Exel Composites in brief

Exel Composites is one of the largest manufacturers of composite profiles and tubes made with pultrusion and pullwinding technologies and a pultrusion technology forerunner in the global composite market. Our forward-thinking composite solutions made with continuous manufacturing technologies serve customers in a wide range of industries around the world. You can find our products used in applications in diverse industrial sectors such as wind power, transportation and building and infrastructure.

Our R&D expertise, collaborative approach and global footprint set us apart from our competition. Our composite solutions help customers save resources, reduce products' weight, improve performance and energy efficiency, and decrease total lifetime costs. We want to be the first choice for sustainable composite solutions globally.

Headquartered in Finland, Exel Composites employs over 600 forward-thinking professionals around the world and is listed on Nasdaq Helsinki. To find out more about our offering and company please visit visit www.exelcomposites.com.

Exel Composites Plc