Interim report for the first quarter of 2022: New CEO calls for strategic review to accelerate top-line growth

Inside information

Today, LED iBond International’s (LED iBond) Board of Directors approved the interim report for the first quarter (Q1) of 2022. Highlights of the report include:

Business development

• In the smart building market, LED iBond’s business is still dominated by sales of LED panels to Nobia and upgrade panels for gas stations. Sales opportunities in this segment still include a number of projects for EV charging stations, indoor car parks, and the company’s sales pipeline is developing satisfactorily, subject to the continued alleviation of supply chain bottlenecks and COVID-19 related travelling and market restraints.
• LED iBond is continuously developing the market position of its offering for the emerging vertical farming market. During Q1, the company recognised revenue from two vertical farming pilots that are both demonstrating the value proposition of LED iBond’s vertical farming solution.
• Customer dialogues confirm that a compact LED-based UV light source is an interesting alternative to traditional UV lamps in a number of UV disinfection applications. For these applications, LED iBond’s LED packaging technology represent a promising platform for some manufacturers of UV disinfection equipment. LED iBond continues to explore such market opportunities in the UV disinfection area.
• Ongoing development projects qualifying for grants are progressing according to plans.
• On 30 April 2022, the company announced the appointment of Martin Løbel as new CEO, replacing Pia Stangerup. Martin Løbel started in his new position on 2 May 2022.
• With a view to accelerating top-line growth, the newly appointed CEO will head up a strategic review of the company’s product offering, product definitions, market focus and go-to-market approach during the coming months.

Financial development

• In Q1 2022, LED iBond generated revenues of TDKK 813, a decrease of TDK 2,348 relative to Q1 of 2021. This change is mainly due to a reduction in sales to spin-off companies of TDKK 2,097.
• In line with the change in accounting principles announced in the consolidated financial statement for 2021, grants and compensations have been reclassified as income to be recognized in coming years along with the depreciation of the assets relating to the grants. At the end of Q1, an amount of TDKK 5,156 is carried in the balance sheet as deferred income relating to grants received prior to 2022.
• No grants were received during Q1 2022, but additional grants are expected during the remaining part of 2022.
• EBITDA came to TDKK -3,394 in Q1, a deterioration of TDKK 2,007 relative to the year-earlier quarter. The decline in EBITDA mainly follows from the reduced sales to spin-off companies, from the absence of grant income compared to Q1 2021 and from inventory write-downs of TDKK 564 related to inventory items that have been rendered obsolete as a result of product upgrades.
• For Q1, the result before tax was a loss of TDKK 6.141 against a loss of TDKK 4,931 in Q1 of 2021.
• The total net outflow of cash during Q1 2022 amounted to TDKK 8,172. The cash outflow is expected to be reduced during the remaining three quarters of the year as grants are expected to be received and revenue of goods sold is expected to increase.
• At the end of Q1, total equity amounted to TDKK 66,300 (corresponding to a solvency ratio of 75 %) compared to TDKK 40,346 (corresponding to a solvency ratio of 65 %) at the end of Q1 2021. This improvement mainly relates to the proceeds from the capital increase in April 2021.
• The cash balance stood at TDKK 17,562 at the end of Q1 2022, as compared to TDKK 3,935 at the end of Q1 2021. The improved cash position is primarily related to the capital increase in April 2021.

Commenting on the Q1 report, Martin Løbel, CEO of LED iBond International, says:

- LED iBond makes complex hardware products, and with our unique technology we can develop a large variety of product features and options. Our challenge is to build and market products that meet our customers’ specific needs. It is all about deciding what to do and what not to do.

So it goes without saying that we must prioritize our time and resources to be successful in the short term and build a solid foundation for our long-term growth ambition. My key objective for now is to grow our top-line and to ensure a path towards cash-positive operations. That is the guiding star for our upcoming strategic review.

Financial key figures for Q1 2022

The full interim financial report for the first quarter of 2022 is available here: https://ledibond.com/documents/