Exel Composites' Business Review Q1-Q3 2024: Turnaround progressing – Revenue and profitability increased significantly in the third quarter

EXEL COMPOSITES PLC          STOCK EXCHANGE RELEASE          31 OCTOBER 2024 at 9:00 EET

This release is a summary of Exel Composites’ Business Review Q1-Q3 2024. The complete report is attached to this release as a pdf file. It is also available on the company’s website at exelcomposites.com.

 

 

Q3 2024 in brief

• Order intake decreased by 7.8% to EUR 21.0 million (Q3 2023: 22.8)
• Revenue increased by 19.7% to EUR 24.6 million (20.5)
• Operating profit increased to EUR 0.6 million (-0.7) and operating profit margin to 2.5% (-3.2%)
• Adjusted operating profit increased to EUR 0.7 million (-1.2) and adjusted operating profit margin to 2.9% (-5.9%)
• Earnings per share was EUR -0.02 (-0.05)
   

Q1-Q3 2024 in brief

• Order intake increased by 2.0% to EUR 76.1 million (Q1-Q3 2023: 74.6)
• Revenue decreased by 0.3% to EUR 74.5 million (74.7)
• Operating profit increased to EUR 1.2 million (-1.2) and operating profit margin to 1.6% (-1.6%)
• Adjusted operating profit increased to EUR 1.5 million (-1.1) and adjusted operating profit margin to 2.0% (-1.5%)
• Earnings per share was EUR -0.03 (-0.30)

 

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:

Exel Composites had another good quarter in July-September 2024. Our revenue and profitability in the third quarter increased significantly year-on-year. In January-September, our order intake increased, and our order backlog was strengthened.

The implementation of our transformative strategy to capture profitable growth advanced well. We focused on larger customers, high-growth customer industries and volume business, all of which position us well for the future. The commissioning of our new factory in India is progressing as per our plans. Once completed, the factory will allow us to better serve wind power customers in India and globally. The facility will be ready for production in the last quarter of 2024.

In September, we completed the strategic review at our Oudenaarde factory in Belgium and entered into consultation with employee representatives regarding the intention to discontinue production at the factory. Unfortunately, launching the process was the necessary action to address loss-making activities. So far, several negotiations have been conducted in a good spirit and we believe that the good cooperation will continue throughout the process.

Order intake increased in Q1-Q3, despite the economic uncertainty

Our order intake increased in January-September 2024, amounting to EUR 76.1 million for the period. As a result, the order backlog at the end of September stood at EUR 30.6 million, which is 7.3% higher than in the same period last year. The order intake in the third quarter, however, fell short of the comparison period and of the first and second quarters of 2024.

In terms of order intake, the third quarter is often seasonally the weakest quarter of the year. Uncertainty about the global economic outlook continued in the third quarter and the macroeconomic sentiment remained indecisive. The year 2023 was very difficult for the pultrusion industry in general. Compared to this, our customer activity has increased in all our strategic customer industries except in the construction market.

Significant agreements with two major wind turbine OEMs

All in all, we performed well despite the uncertain operating environment and achieved customer engagements that are important for our future growth.

In September, we announced one of the highlights of the quarter as Exel Composites and its joint venture Kineco-Exel India won the bidding process in India for supplying carbon planks for wind turbine spar caps for Vestas Wind Systems A/S globally. The products, once tested and approved for production, will be manufactured in our new factory in India. Deliveries are estimated to begin in the last quarter of 2025. The step deepens our collaboration with Vestas, which started over a decade ago. This is already the second spar cap customer engagement for the new India factory this year, as we announced a multi-year agreement with another major wind turbine manufacturer in the first quarter.

After the review period, we signed a multi-year supply agreement for helihoist systems for offshore wind turbines with a major Western wind turbine manufacturer. The composite components will be manufactured with pultrusion at Exel’s Nanjing factory in China, followed by necessary post-processing and assembly work. Deliveries are expected to begin in 2025.  

Revenue increased in most customer industries

Revenue for the third quarter grew by 19.7% year-on-year coming in at EUR 24.6 million and was at EUR 74.5 million for January-September 2024 (Q1-Q3 2023: 74.7).

In the third quarter, revenue increased from the comparison period in 2023 in all of our customer industries, apart from the Energy customer industry, where we expect deliveries from our new Indian factory to pick up in 2025.

Engineered Solutions Business Unit reported EUR 20.0 million in revenue in the third quarter, while Industrial Solutions Business Unit reported EUR 4.6 million. I am pleased that Industrial Solutions achieved growth in the third quarter and two new significant wind power customer engagements in line with our strategy. Engineered Solutions, on the other hand, is progressing well in optimizing our factory network and securing new customers.

We have spent a considerable amount of time identifying future needs of our customers. As a result, one of the key targets of our transformative strategy is to increase customer value by offering post-processing services, engineering support and productization, among others. I am pleased to report on progress towards this goal also in the third quarter. For example, in the Transportation customer industry, we won additional volumes by starting to provide post-processing services such as painting services for profiles used in transport equipment, and the work continues.

Operating profit continued to improve

While revenue in January-September 2024 was at the previous year’s level, our profitability during the same period improved due to determined adjustment measures taken during the year.

In the third quarter 2024, the actions to optimize capacity, cost control and operational measures elevated our adjusted operating profit margin to 2.9% (-5.9%) and our adjusted operating profit to EUR 0.7 million (-1.2).

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 and consolidating production.

Our net cash flow from operating activities has been impacted by increases in working capital, higher interest rates and other financing costs, coming in at EUR -1.3 million (3.7) for January-September 2024.

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.

Sincerely,

Paul Sohlberg

 

Consolidated key figures

	Q3	Q3	Change	Q1-Q3	Q1-Q3	Change	Q1-Q4
EUR thousand	2024	2023	%	2024	2023	%	2023
Revenue	24,585	20,538	19.7	74,539	74,741	-0.3	96,815
Operating profit	620	-655	194.6	1,224	-1,187	203.1	-4,863
% of revenue	2.5	-3.2		1.6	-1.6		-5.0
Adjusted operating profit 1)	707	-1,206	158.6	1,526	-1,136	234.4	-2,446
% of revenue	2.9	-5.9		2.0	-1.5		-2.5
EBITDA	2,189	1,055	107.4	5,699	4,009	42.2	3,832
Adjusted EBITDA 1)	2,276	504	351.7	6,001	4,060	47.8	4,059
Profit before tax	-1,769	-421	-319.9	-1,541	-2,593	40.6	-8,254
Profit for the period	-1,824	-639	-185.3	-1,850	-3,712	50.2	-9,309
Profit for the period excluding non-controlling interest	-1,730	-581	-197.7	-1,600	-3,564	55.1	-9,130
% of revenue	-7.0	-2.8		-2.1	-4.8		-9.4
Shareholders' equity	36,726	23,578	55.8	36,726	23,578	55.8	17,687
Interest-bearing liabilities	31,266	50,475	-38.1	31,266	50,475	-38.1	43,790
Cash and cash equivalents	10,697	17,823	-40.0	10,697	17,823	-40.0	10,952
Net interest-bearing liabilities	20,569	32,652	-37.0	20,569	32,652	-37.0	32,838
Net debt to adjusted EBITDA 2)	3.4	4.8	-29.2	3.4	4.8	-29.2	8.1
Capital employed	67,991	74,053	-8.2	67,991	74,053	-8.2	61,477
Return on equity, %	-19.7	-10.7	-84.3	-9.1	-18.3	50.6	-38.7
Return on capital employed, %	3.7	-3.3	210.3	2.9	-1.9	247.4	-6.8
Equity ratio, %	39.7	23.3	70.6	39.7	23.3	70.6	20.9
Net gearing, %	56.0	138.5	-59.6	56.0	138.5	-59.6	185.7
Net cash flow from operating activities	-2,308	1,172	-297.0	-1,314	3,692	-135.6	4,445
Net cash flow from investing activities	-701	-614	14.3	-1,557	-2,211	-29.6	-3,076
Capital expenditure	801	633	26.6	1,616	2,708	-40.3	3,523
% of revenue	3.3	3.1		2.2	3.6		3.6
Research and development costs	821	813	1.0	2,817	2,745	2.6	3,711
% of revenue	3.3	4.0		3.8	3.7		3.8
Order intake	21,043	22,834	-7.8	76,061	74,559	2.0	98,142
Order backlog	30,557	28,474	7.3	30,557	28,474	7.3	29,765
Earnings per share, diluted and undiluted, EUR	-0.02	-0.05	66.9	-0.03	-0.30	89.3	-0.77
Equity per share, EUR	0.34	1.96	-82.72	0.73	1.96	-62.84	1.47
Average share price, EUR	0.34	3.47	-90.1	0.47	4.03	-88.3	3.60
Average number of shares, diluted and undiluted, 1,000 shares 3)	106,470	11,854	798.2	49,507	11,854	317.6	11,854
Employees, average	616	642	-3.9	620	679	-8.7	667
Employees, end of period	616	639	-3.6	616	639	-3.6	623

 

 

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

	Q1	Q2	Q3	Q1-Q3
EUR thousand	2024	2024	2024	2024
Engineered Solutions BU	19,119	22,359	20,008	61,487
Industrial Solutions BU	4,246	4,228	4,567	13,041
Other	0	2	10	12
Total	23,365	26,589	24,585	74,539

 

Revenue by customer industry

	Q3	Q3	Change	Q1-Q3	Q1-Q3	Change	Q1-Q4
EUR thousand	2024	2023	%	2024	2023	%	2023
Buildings and infrastructure	5,715	4,283	33.4	16,171	14,934	8.3	18,539
Industrial	3,779	3,025	24.9	11,404	11,862	-3.9	15,358
Energy	4,931	5,242	-5.9	14,812	17,033	-13.0	22,108
Transportation	3,956	3,266	21.1	12,970	11,650	11.3	16,268
Other	6,204	4,723	31.4	19,182	19,262	-0.4	24,541
Total	24,585	20,539	19.7	74,539	74,741	-0.3	96,815

 

Vantaa, 31 October 2024

 

Exel Composites Plc

Board of Directors

 

 

Financial results briefing

 

Exel Composites will hold a financial results briefing regarding the Business Review Q1-Q3 2024 today at 12:30 EET. To participate in the online event, please register in advance by sending an email to [email protected].

 

For further information, please contact:

 

Mikko Rummukainen, CFO

tel. +358 20 754 1335

 

Lilli Riikonen, Head of Investor Relations

[email protected]

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