Cacotec SA - Interim report January - March 2023

January–March

• Order backlog increased 1.6% compared to Q422 and 20.1% compared to Q122 to EUR 149.6 million
• Revenues increased 44.2% to EUR 39.5 million (27.4)
• EBIT amounted to EUR 0.3 million (-1,5), corresponding to an EBIT-margin of 0.7% (-5.4%)
• Net result for the period was EUR -1.3 million (-0.3)
• Operating cash flow amounted to EUR -2.9 million (-0.1)
• Earnings per share basic and diluted amounted to EUR -0.014 (-0.003)

Key events during the quarter

• On February 22nd Cavotec carried out a directed issue of 12,452,830 shares, raising proceeds of SEK 165 million. The increase was approved at an extraordinary general meeting March 17, 2023
• On March 8th Joakim Wahlquist was appointed Chief Financial Officer of the Cavotec Group effective May 1, 2023. Mr. Wahlquist joined Cavotec on March 8, 2023, as CFO designate and will replace the current CFO Glenn Withers.
• During the quarter Cavotec agreed with its lenders to amend the terms of the Credit Facility Agreement, with improvements in the conditions for the remainder of the term of the facility, which expires in mid 2025.

Comment from the CEO

Strong revenue development – start generating profit

In the first quarter, we reported revenues of EUR 39.5 million, up 44% compared to last year, and the order backlog grew slightly in the quarter to EUR 149.6 million, up 20% compared to last year. For the past two quarters we have proven our ability to deliver on our order book, while at the same time continuing to sign new orders at a good pace.
 
Although we started to generate a positive EBIT of EUR 0.3 million on the increased volume, there is still much to do. We saw losses in the second half of 2022 coming from lower margins and higher fixed costs. We are working with full focus to drive more profitability out of our order book. Step by step we will see the benefits of changes that we have already made in the past few months. But it takes time to become evident in our profitability for several reasons. Firstly, in our Port & Maritime division, we took orders some time ago where our pricing was too low and did not foresee the supply chain disruption and cost increases that occurred. It will take some time for this impact to unwind due to long delivery schedules, with several orders for shore power connected to new ship builds. However, the long schedule represents an opportunity to find ways to offset the higher costs than planned in these orders with optimization projects. We are actively working on this. Secondly, last year, like most companies, we had to increase our list prices to counter the impact of higher costs. We did not make the changes early and high enough, but we have caught up now. Both these effects combined point to a steady improvement in profitability during the year.
 
Operating cash flow was negative and amounted to EUR -2.9 million in the quarter, mainly as we continue to grow but also due to our overall profitability. As profitability improves, cash will follow, and we are also working on the order to cash cycle to start to make improvements.
 
In February we carried out a directed rights issue, raising proceeds of approximately SEK 165 million, which was approved at an extraordinary general meeting in March. We highly appreciate the support from our owners to provide Cavotec with new capital, to increase our financial flexibility to support the execution on our strong order book and strengthen our financial position. Having said that, cost consciousness is and will be an important part of our journey to become profitable. We focus on improving our efficiency in many areas and on renegotiating contracts where possible. In essence, resources must be focused on the right things.
 
Starting this quarter, we have decided to report Cavotec´s financial performance in two segments, Ports & Maritime and Industry.

Ports & Maritime´s order backlog increased 2.9% compared to the previous quarter to EUR 120.4 million and 23.6% compared to the same period previous year. The increase was mainly driven by strong order intake for Shore Power and motorized cable reel orders, predominately in Asia.
 
Revenues increased 91.4% to EUR 23.6 million, mainly explained by a strong increase in revenues for shore power, Motorized Cable Reels and MoorMaster products in the Nordics, China, and Southeast Asia.
 
Industry´s order backlog decreased 3.4% compared to the previous quarter to EUR 29.3 million but increased 7.8% compared to the same period previous year. Regarding the decrease in this quarter, I do not see this as a trend as the main contributor was higher orders in December 2022 followed by a slower start in the first quarter. Revenues increased 5.5% to EUR 15.9 million compared to the same period last year.
 
On March 8th I appointed Joakim Wahlquist CFO of the Cavotec Group effective May 1st, 2023. Joakim joined the same day we announced the appointment and has since then worked in parallel with current CFO Glenn Withers. Joakim is a very good addition to the team, since he has been actively driving transformation projects like those Cavotec is now undertaking and will play a key role in turning Cavotec into a more profitable company. I have enjoyed working with Glenn during the past year and I respect his decision to leave Cavotec for family reasons.
 
It is very satisfying to see that we are making progress towards turning Cavotec into a profitable, as well as a growing company. I continue to spend most of my time meeting customers and colleagues around the world, and everywhere I see strong demand for our products. We are confident about our future, and we are in the right place to leverage on the technological shift to sustainable electrical solutions, and I am convinced we can get on the right track towards increased profitability.
 
Stockholm, April 27, 2023

David Pagels
Chief Executive Officer

ENDS

Webcast
A webcast - in English – will be held on 27 April 2023 at 11:30 CEST. CEO David Pagels and CFO Glenn Withers will present the Quarterly Report. If you wish to participate via webcast, please use the link below. Via the webcast you may submit written questions. https://ir.financialhearings.com/cavotec-q1-2023
 
If you wish to participate via teleconference, please register on the link below. After registration you will be provided phone numbers and a conference ID to access the conference. You can ask questions verbally via the teleconference. https://conference.financialhearings.com/teleconference/?id=5002142
 
Quarterly Reports on www.cavotec.com
The full report for the period January-March 2023 and previous quarterly and full year reports are available at: http://ir.cavotec.com/financial-reports