Enersense International Plc's Half-year Financial Report January–June 2024: Insider information: Difficult first half of the year, reaching turnaround at the end – new guidance for 2024

The figures in this release are unaudited. The figures in brackets refer to the comparison period (the corresponding period of the previous year), unless otherwise stated. All figures and sums have been rounded off from the exact figures which may lead to minor discrepancies upon addition or subtraction.

April–June 2024

• Revenue EUR 100.8 million (86.3), 16.8% year-on-year.
• EBITDA EUR -9.5 million (3.0), EBITDA margin -9.4% (3.5).
• Revenue of the core businesses EUR 83.1 (82.8) million.
• Adjusted EBITDA in the core businesses EUR 3.9 (4.0) million.
• Operating result EUR -11.8 million (0.6), result margin -11.7% (0.7).
• Undiluted earnings per share EUR -0.84 (-0.11).

January–June 2024

• Revenue EUR 199.0 million (161.3), 23.3% year-on-year.
• EBITDA EUR -5.0 million (3.1), EBITDA margin -2.5% (1.9).
• Revenue of the core businesses EUR 161.9 (153.3) million.
• Adjusted EBITDA in the core businesses EUR 7.9 (6.5) million.
• Operating result EUR -10.1 million (-1.6), result margin -5.1% (-1.0).
• Undiluted earnings per share EUR -1.18 (-0.34).
• The renewable energy project portfolio totalled 4,7 GW (12/2023: 3,3 GW), at the end of the review period. Of this, solar power projects represented 0,7 GW (12/2023: 0 GW). In addition, projects in feasibility study phase totalled 6,7 GW (12/2023: 4,0 GW).
• The order backlog stood at EUR 415 million (527) at the end of the first half of the year.
• On 9 April 2024 Enersense announced that Mikko Jaskari, the company’s CFO and a member of the Group Executive Team, will step down from his position and Jyrki Paappa has been appointed new CFO and member of the Group Executive Team from 22 July 2024, until which Risto Takkala is Enersense’s acting CFO.
• On 29 April 2024 Enersense announced that it writes down a EUR-6-million receivable following an arbitral tribunal’s decision in Lithuania, and withdraws its 2024 EBITDA guidance for the time being.
• On 3 May 2024 Enersense announced that CEO Jussi Holopainen will leave his position and the company starts the recruitment process for a new CEO. Juha Silvola, EVP of Enersense's, Power and Connectivity business areas, was appointed as acting CEO from 3 May 2024.
• On 19 June 2023 Enersense announced that it has revised its strategy and will focus on its core businesses – project and service operations for the green energy transition. Also, an agreement on a new EUR-10-million revolving credit facility was announced as well as the decision of the company's Board not to exercise the right to distribute funds as a return of capital.
• Enersense has agreed with its financing providers that covenants will not be measured at 30 June 2024. Measurement of the new covenants that were agreed on in connection with the RCF will begin on 30 September 2024.
• Along with its new strategy, Enersense has introduced, as a new KPI, adjusted EBITDA of the core businesses. Core businesses include maintenance, resource and project services for onshore production plants in the Industry business, design, construction and maintenance of transmission grids and electric substations as well as wind farms and solar farms and the entire Connectivity business.

After the review period:

On 11 July 2024 Enersense announced that its Board of Directors has appointed Kari Sundbäck as the President and CEO of the company as of 25 November 2024. Juha Silvola will continue as the acting CEO of Enersense until 24 November 2024 after which he will return to EVP, Power and Connectivity business areas. On the same occasion it was announced that Anders Dahlblom, member of the Board, has been elected as the Chair of the Board as Jaakko Eskola has chosen to step down from this position and from the Board.

Guidance for the financial period 2024

In 2024, Enersense's revenue is expected to be in the range of EUR 365-390 million and EBITDA in the range of EUR 4–8 million. Adjusted EBITDA in the core businesses is forecast to be in the range of EUR 17–21 million.

In 2024, revenue is expected to grow. The EBITDA is expected to improve in the latter part of the year, taking normal seasonal variation into account, following the measures to improve profitability.

The financial guidance does not take into account any divestments that may result from the strategic assessment (insider information, 19 June 2024).

Guidance updated on 29 April 2024
Enersense announced in a stock exchange release on 29 April 2024 that it withdraws its EBITDA guidance given for the year 2024 for the time being. The company’s estimate on the revenue development in 2024 remained unchanged.

Key figures

President and CEO (acting) Juha Silvola

"Enersense’s growth continued in the first half of 2024. Our revenue increased by 23.3% to EUR 199.0 (161.3) million. The Group’s EBITDA turned into negative and was EUR -5.0 (3.4) million. In our view, the second quarter was the weakest of the year due to loss-making offshore business, costs relating to ramp-up of the EV charging business as well as the write-downs. Thanks to actions taken during the spring the turnaround in the profitability development started to be visible at the end of the second quarter, and the outlook for the latter part of the year is positive. Along with the new strategy, we have introduced a new KPI i.e. adjusted EBITDA of the core businesses. The adjusted EBITDA of the core businesses improved in the first half of the year, laying a good foundation for the future. The Group’s order backlog continued to be at a good level at the end of the review period, at EUR 415 (527) million, taking into account normal fluctuations in orders received.

In June, we announced that we will focus on our core businesses, which provide project and service operations for the green energy transition. These core businesses include maintenance, resource and project services for onshore production plants in the Industry business, design, construction and maintenance of transmission grids and electric substations as well as wind farms and solar farms and the entire Connectivity business. Along with the renewed strategy we will abandon our previous goal of becoming a zero-emission energy producer. In addition, we are considering selling our onshore wind power and solar power project development operations and are carrying out a strategic assessment of our offshore wind power business and our business operations focusing on the development of zero-emission transport solutions. On the same occasion we agreed with our financing providers on a EUR-10-million senior unsecured revolving credit facility (RCF) to support the implementation of the company’s strategy. The company will publish further information about the progress of the strategic assessment at the appropriate time.

Profitability of the core businesses is at the core of our actions. During the first part of the year, and especially in the second quarter, there were significant non-recurring items in the core businesses that turned their EBITDA negative. However, in the first half of the year, the adjusted EBITDA of the core businesses improved year-on-year thanks to better profitability in the transmission network projects and growth of the Connectivity segment's revenue and measures to improve profitability.

Profitability of the businesses defined in the renewed strategy as non-core businesses was weak in the first half of the year. EBITDA for the non-core businesses was burdened especially by the offshore business, whose loss deepened further during the second quarter. In the second quarter, we have examined the causes for the challenges of the non-core business’s weak profitability, and analysed their risk positions and outlook. In the offshore business measures to improve profitability started to bring first results towards the end of the period and EBITDA is expected to be positive in second half of the year. The ramp-up of the EV charging business has been slower than anticipated in the tightened market situation and this has reflected into its profitability.

Based on the good profitability development in the core businesses and measures to improve profitability in the non-core businesses we have today given a new full-year guidance for 2024. Our view is that we have now reached the turning point and the second half is stronger than the first part of the year thanks to the corrective actions. In 2024, we expect the revenue to be in the range of EUR 365–390 million and EBITDA in the range of EUR 4–8 million. Adjusted EBITDA in the core businesses is forecast to be in the range of EUR
17–21 million.

The growth outlook in the green energy transition for the project and service business operations is good, particularly in energy infrastructure construction, and we are determined to take measures to improve profitability in all segments, using our strong professional skills to create a path to profitable growth. I would like to thank all Enersense employees for their commitment to these efforts and to welcome Kari Sundbäck, the new President and CEO, who will start on 25 November 2024, and Anders Dahlblom, the new Chair of the Board, whose appointments we announced on 11 July 2024, to accelerate the implementation of Enersense’s new strategy."

This release is a summary of Enersense's Half-year Financial Report. The complete report is attached to this release as a pdf-file. It is also available on the company's website at www.enersense.com/investors/.

ENERSENSE INTERNATIONAL PLC
Tommi Manninen
SVP, Communications and Public Affairs

More information:

Juha Silvola, CEO (acting)
Tel. +358 40 7631599
Email: juha.silvola@enersense.com

Jyrki Paappa, CFO
Tel.: +358 50 556 6512
Email: jyrki.paappa@enersense.com

Media contacts:
Tommi Manninen, SVP, Communications and Public Affairs
Tel. +358 40 043 7515
Email: tommi.manninen@enersense.com

Distribution:
Nasdaq Helsinki
Major media
www.enersense.com