WINDOWMASTER HALF-YEAR REPORT 2023
Company Announcement No. 38-2023 - Interim report (full H1-2023 report).
Vedbæk, 17 august 2023
Financial Highlights H1 2023 – Recovery in May and June after weak start to the year
- Order intake decreased 9% (decreased 1% excluding OEM) to DKK 128.2m in H1 2023 (H1 2022: DKK 140.6m)
- Revenue decreased 3% (increased 3% excluding OEM) to DKK 114.8m in H1 2023 (H1 2022: DKK 117.8m)
- EBITDA decreased 80% to DKK 1.3 (H1 2022: DKK 6.5m) corresponding to an EBITDA margin of 1.3% (H1 2022: 5.5%)
- The outlook for 2023 is maintained. Revenue is still expected to be in the range of DKK 240-250m and EBITDA between DKK 14-19m. The guidance was changed on 12 May 2023 with reference to Company Announcement 37-2023.
FINANCIAL KEY FIGURES H1 2023
| DKKm | H1 2023 | H1 2022 | Change |
| Order intake | 128.2 | 140.6 | -9% |
| Revenue | 114.8 | 117.8 | -3% |
| Gross Profit | 46.7 | 48.6 | -3% |
| Gross Margin % | 40.7 | 41.3% | |
| EBITDA | 1.3 | 6.4 | -78% |
| EBITDA % | 1.3% | 5.4% | |
| Result after tax | -6.3 | -0.8 | |
| Net working capital | 41.0 | 31.8 | |
| Cash flow from operations | -0.6 | 2.9 | |
| NWC % of revenue (12 months running) | 17.3% | 14.3% | |
| Equity ratio % (net cash) | 23.7% | 26.1% |
Erik Boyter, CEO comments on the developments in the first half: “After a weak start to the year, order intake and revenue have recovered in May and June. As announced in May, the lower order intake and revenue in the first four months of 2023 was primarily related to the market situation of one big OEM customer whereas the remaining part of the business was stable although customers in general have also returned to old habits and reduced their stock levels in line with an improved supply chain situation. We are pleased, however, that our opportunity pipeline remains healthy, continues to grow, and includes some very large and interesting potential projects – fully in line with our Accelerate Core Strategy.”
MARKET ACTIVITY
In general, market activity (specification of projects) is high and investments in intelligent natural ventilation solutions are on the rise –for integrated offerings for full indoor climate solutions both for new buildings and for refurbishment of existing buildings.
Demand is driven by investments in energy efficient solutions and environmental regulation in both EU and US. In the EU, the demand is fueled by the EU’s Green Deal and the REPowerEU-plan. Building renovation is one of the most important and efficient solutions to address both climate change and reliance on fossil fuels.
In the US, the market for green technology is very attractive, and activity is high. WindowMaster is the only manufacturer of window automation in the intelligent natural ventilation niche with local presence (sales organization and logistic warehouse) in the US.
Order intake in the first half of 2023 amounted to DKK 128.2.3m (2022: DKK 140.6m) and 12-months-trailing order intake amounted to DKK 241 (FY 2021: DKK 252m). The drop in order intake is primarily related to the market situation of one big OEM customer, where 12 month running order intake has dropped to index 68 compared to one year ago, which represents significant volumes for WindowMaster. On projects where WindowMaster is directly involved activity remains steady with an expected pick up in 2nd half of 2023. In June, WindowMaster secured one of the largest orders in the company’s history from Space House in London, UK which is an iconic masterpiece located in central London, designed to obtain both a BREEAM Outstanding and a Fitwel certification. Significant orders were also received from the US, New Zeeland, France, Bulgaria, Germany,
Quarterly developments in order intake
FINANCIAL DEVELOPMENTS H1 2023
Revenue
Revenue in H1 amounted to DKK 114.8m (H1 2021: 117.8m) equivalent to a decrease of 3%, primarily explained by the missing revenue from on big OEM customer and destocking in general. Excluding OEM customers, the revenue increased 3%. The drop in revenue is related to the drop in order intake as explained above.
Quarterly developments in Revenue
Gross profit
Gross profit amounted to DKK 46.7m in H1 (H1 2022: DKK 48.6m) equivalent to a gross margin of 40.7% (H1 2022: 41.3 %). The decrease in the gross margin is related to timing of project invoicing – which is expected to happen in H2 2023.
EBITDA
Operating profit (EBITDA) amounted to DKK 1.3m in H1 (H1 2022: DKK 6.4m) equivalent to an EBITDA margin of 1.3% (H1 2022: 5.4%). The decrease in the EBITDA margin is explained by a drop in revenue and temporary under-absorption, as the organization had been sized to execute a larger order backlog. Management has decided not to adjust the organization as the drop in activity is seen as a short/midterm effect. Maintaining a highly skilled labor force is seen as a prerequisite to execute on our Strategy plan “Accelerate Core” in the coming years.
Quarterly developments in EBITDA and EBIT
The implementation of temporary price supplements due to cost inflation in Q2 2022 had a positive impact on earnings last year.
Cash flow and working capital
Cash flow from operating activities in H1 amounted to DKK -0.6m (H1 2021: 2.9m). The decrease on last year is primarily due to the timing of invoicing as cash flow in July has improved significantly – as expected. Cash flow from investment activities in H1 amounted to DKK -3.0m (H1 2021: -5.4m) and was related to ERP, as well as investments in product development and tests.
At the end of H1, net working capital amounted to DKK 41m (End of 2022: 31.8xm). Net working capital as a percentage of revenue deteriorated to 17.3% (End of 2022: 14.3%)
Net working capital increased in H1 this year due to higher activity before the H1 closing – and is back to a more normal level end of July.
Cash and financial position
Net interest-bearing debt at the end of H1 amounted to DKK 47.9m (End of 2022: 39.6m). The change is primarily related to the increase in net working capital as explained above. Access to capital and good banking relationships have proved to be a source of competitive advantage.
Financial gearing calculated as NIBD/EBITDA amounted to 4.0 at the end of H1 (12 months EBITDA. (End of 2022: 2.4). The target is to be below 2.0.
At the end of H1, Equity amounted to DKK 28.3m (End of 2022: 34.4), equivalent to an equity ratio of 23.7%. The target is to be above 30%.
Risks
WindowMaster is exposed to market risks including currency risks, interest risks and commodity price risks as part of its ongoing operations and investment activities. As a supplier to the global construction industry, the company is also exposed to cyclical market developments and a potential economic slowdown.
The key commercial risks relate to the company’s ability to effectively manage the anticipated growth. This involves attracting sufficient and skilled employees and safeguarding the level of competencies and market knowledge within the company. Additionally, the company is dependent on consistent and timely delivery of materials from suppliers to the assembly facility in Herford, Germany.
Outlook for 2023
- The outlook for 2023 is maintained. Revenue is still expected to be in the range of DKK 240-250m and EBITDA between DKK 14-19m. The guidance was revised downwards on 12 May 2023 (Company Announcement 37-2023) due to less order intake and revenue than anticipated in the first four months of the year. The previous guidance was Revenue in the range of DKK 260-270m and EBITDA between DKK 23-28m.
Unforeseen events such as geo-political uncertainty and development in inflation/interest rates may impact developments in the remainder of the year.
CONFERENCE CALL
WindowMaster invites investors to participate in a live video event on 17 August 2023 at 13:00 CET. The company’s CEO, Erik Boyter, and CFO Steen Overgaard Sørensen will present the company’s half year report in Danish. (Register at: HCA)
FORWARD-LOOKING STATEMENTS
This announcement contains forward-looking statements. Words such as ‘believe’, ‘expect’, ‘may’, ‘will’, ‘plan’, ‘strategy’, ‘prospect’, ‘foresee’, ‘estimate’, ‘project’, ‘anticipate’, ‘can’, ‘intend’, ‘outlook’, ‘guidance’, ‘target’ and other words and terms of similar meaning in connection with any discussion of future operating or financial performance identify forward-looking statements. Statements regarding the future are subject to risks and uncertainties that may result in considerable deviations from the outlook set forth. Furthermore, some of these expectations are based on assumptions regarding future events which may prove incorrect.
