OXE Marine AB (publ) Interim Report 1 July to 30 September 2024

Third Quarter 2024
· Consolidated Net turnover amounted to SEK 45.6 m (SEK 47.5 m).
· Consolidated Gross Profit amounted to SEK 18.1 m (SEK 17 m) with a gross margin of 40% (36%).
· Consolidated EBITDA amounted to SEK -5.7 m (SEK -10.2 m).
· The consolidated result for the quarter amounted to SEK -14.8 m (SEK -17.6 m).
· Consolidated EPS and Diluted EPS amounted to SEK -0.04 (SEK -0.06).
 
January - September 2024
· Consolidated Net turnover amounted to SEK 130.2 m (SEK 126.6 m).
· Consolidated Gross Profit amounted to SEK 42.6 m (SEK 25.3 m) with a gross margin of 33% (20%).
· Consolidated EBITDA amounted to SEK -36.4 m (SEK -55.4 m).
· The consolidated result amounted to SEK -68.7 m (SEK -89 m).
· Consolidated EPS and Diluted EPS amounted to SEK -0.21 (SEK -0.29).

Significant events during the third quarter
· OXE Marine received a confirmation from US boat builder to increase the previously announced order from USD 0.9 m to USD 3.3 m.
· OXE Marine received order of USD 1.5 m to supply a United States governmental agency.
· OXE Marine prepares control balance sheet.
· OXE Marine announces discussions with the EIB and major bondholders to renegotiate terms in order to reinstate the balance sheet.
· OXE Marine receives an additional order from us boat builder for USD 2.6 m taking the total order value to USD 5.9 m including previously announced orders.
· OXE Marine announces conditional recapitalisation incl. A rights issue of approx. MSEK 78 and a full restructuring of debt financing of approx. MSEK 243, removing all interest-bearing debt.
· Control Balance Sheet shows that the share capital of OXE Marine is fully intact.
· Oxe Marine announces discussion with the EIB and major bondholders to renegotiate terms in order to reinstate the balance sheet.
· Notice of extraordinary general meeting 2024 in Oxe Marine AB (Publ).

Significant events during the year until September
· OXE Marine received a purchase order worth USD 0.9 m from a US boat builder with an option to increase the total order to USD 3.3 m.
· OXE Marine received a purchase order worth USD 0.9 m from the US Department of State.
· OXE Marine announced collaboration with trim and stabilization systems provider Humphree.
· OXE Marine signed distributor agreement with SARJ in Sweden and Finland.
· OXE Marine signed distributor agreement with Bota Technik in Poland.
· OXE Marine continued expansion of dealer and OEM network in the US.
· OXE Marine received a confirmation from US boat builder to increase the previously announced order from USD 0.9 m to USD 3.3 m.
· OXE Marine received order of USD 1.5 m to supply a United States governmental agency.
· OXE Marine prepares control balance sheet.
· OXE Marine announces discussions with the EIB and major bondholders to renegotiate terms in order to reinstate the balance sheet.
· OXE Marine receives an additional order from us boat builder for USD 2.6 m taking the total order value to USD 5.9 m including previously announced orders.
· OXE Marine announces conditional recapitalisation incl. A rights issue of approx. MSEK 78 and a full restructuring of debt financing of approx. MSEK 243, removing all interest-bearing debt.
· Control balance sheet shows that the share capital of OXE Marine is fully intact.
· Oxe Marine announces discussion with the EIB and major bondholders to renegotiate terms in order to reinstate the balance sheet.
· Notice of extraordinary general meeting 2024 in Oxe Marine AB (Publ).

Significant events after the reporting period
· OXE Marine initiates a written procedure to obtain bondholder approval of the debt-to-equity swap.
· OXE Marine receives approval from bondholders in written procedure.

A word from the CEO
Improved Profitability
“This quarter showed a healthy improvement in gross margin with operating expenses kept under control, with EBITDA being the best operating result in the company’s history and a move in the right direction.”
 
During the quarter, the Company received additional orders from a U. S. boat builder with the net result of a total order value of USD 5.9 m. The engines to be delivered are based on the OXE200 platform and modified to be used for an inboard application. This order is cash generative, as several key components, such as the powerhead and engine control unit, are already in inventory. Due to this order, the Company is no longer accepting orders for the OXE150-200 range, as the small block engine is effectively sold out. Deliveries on the order began from our Albany, Georgia facility during the quarter, with an increase in deliveries planned for the coming quarters.
 
The Company also delivered several OXE Jet-Tech units (see front page picture) to end users during the quarter. This is a unique product in the high-powered outboard market. While it currently represents a small portion of propulsion sales, it marks our entry into a new marine segment, offering a solution for users who previously only had access to inboard jet configurations.
 
Total sales for the quarter amounted to SEK 45.6 m (SEK 47.5 m), a decrease of 4%. Propulsion sales amounted to SEK 30.3 m (SEK 35.8 m) representing a decrease of 15% relative to the same quarter of the prior year. Sales from Parts & Accessories amounted to SEK 15.3 m (SEK 11.7 m), representing growth of 31% relative to the same quarter of the prior year. Parts & Accessories contributed 34% (25%) of total revenue in the third quarter.
 
Gross margin amounted to 40% (36%) during the quarter. This is the highest gross margin reported during the quarter. The increased profitability is as a result of two main strategic focus areas, growing P&A contribution to total revenue and an increase in direct to OEM business. Additionally, we started to see the price increases implemented on April 1st, taking effect during the quarter.
 
Operating expenses (“OPEX”) for the quarter amounted to SEK 24.0 m (SEK 24.8 m) and was within our short-term target communicated in Q2, of keeping OPEX under SEK 25 m per quarter. With increased profitability and cost control, the Company had its best quarter in its history at an operating profit level with EBITDA amounting to SEK -5.7 m (SEK -10.2m).
 
A large portion of the quarter required the attention of Management to focus on refinancing and recapitalisation discussions with shareholders, bondholders and the EIB. As there were reasons to assume the total equity being lower than 50% of the parent company’s share capital, the Board of directors prepared a Control Balance Sheet in accordance with the provisions of the Swedish Companies Act (sw “Kontrollbalansräkning”) which concluded that the share capital is intact. Management and the Board continue to monitor the balance sheet while the refinancing and recapitalisation of the business is underway, which will also address the need for increased share capital in the parent company. On 23 October the company announced that it had received approval from bondholders in a written procedure, which is a very strong signal that the refinancing is on track.
 
Cashflow from operations amounted to SEK -2m and the quarter ended with SEK 6.1m in cash. Working capital balances were stable: accounts receivable amounted to SEK 24.6m (SEK 34.4m), accounts payable amounted to SEK 37.4m (SEK 52.3m) and inventory amounted to SEK 99.3m (SEK 116.1m). The Company continues with its build-to-order strategy, successfully reducing inventory levels. As we ramp up production of small block engines, we have prioritized working closely with sub-suppliers, placing timely orders, and implementing assembly software in our Albany facility to support this ramp-up.
 
Lastly, I would like to thank the employees and fellow members of Management who have been extremely focused on delivering on the company’s strategy. I would also like to thank all stakeholders, the EIB, Bondholders and Shareholders who have come together to discuss with the Board and Management to find a viable refinancing and recapitalisation solution to support the long-term growth of OXE Marine on its trajectory to becoming an emerging player in the marine industry.
 
 - Paul Frick, CEO