WindowMaster increases mid-term financial targets based on the launch of a new strategy, favorable market conditions and historically high order intake

WindowMaster now expects 10-15% annual organic growth until 2025 (previous expectations 5-10 %) and an EBT margin of more than 10% in 2025 (EBITDA ~15%). WindowMaster will accelerate its core by focusing on integrated indoor climate solutions, service contracts and refurbishments. The positive market outlook has been confirmed by historically high order intake in the first five months of 2022. The guidance for 2022 is maintained.

Company Announcement No. 027-2022 – Inside information

Today, the Board of Directors has adopted a new strategy “Accelerate Core” and committed to new financial targets for 2025. The previous strategy “Break the Code 2.0” has been implemented and created the foundation for raising the bar and setting new targets and ambitions.

WindowMaster is a CleanTech company contributing to making buildings more sustainable via a market-leading position in intelligent natural ventilation. The addressable market is supported by important megatrends such as Climate change, CleanTech, and Digitalization.

In Europe, EU’s Green Deal and most recently, the REPowerEU plan, accelerating the move towards a green future that is less reliant on fossil fuels, are driving increased investments in energy efficiency. Buildings account for approximately 40% of Europe’s energy consumption. 72% hereof originates from heating, ventilation, and lighting. A transition to net-zero emission buildings is both urgent and imperative. It is estimated that 97% of Europe’s buildings require upgrades to improve their energy efficiency, which makes building renovation one of the most important and efficient solutions to address both climate change and the reliance on fossil fuels.

Strategy update

In 2018, WindowMaster adopted the strategy “Break the Code 2.0”. The Strategy has essentially been executed, which means that the company now has a solid foundation for accelerating its core business. Thus, the company has established a scalable production platform in Herford (Germany), a streamlined and focused product offering, structured internal processes, and a strengthened market position in Northern Europe, and successfully expanded in North America. Finally, an ambitious sustainability strategy has been implemented and embedded as an integral part of WindowMaster’s identity and key business actions. This includes commitment to carbon-neutrality in 2030 for Scope 1+2 and signing up to the Science-Based Targets initiative as one of few Danish SMEs.

Today, the Board of Directors has adopted a new strategy “Accelerate Core” and committed to more ambitious financial targets. WindowMaster will lift growth and profitability by accelerating its core and focusing on three strategic priorities:

The first area is integrated offerings of full indoor climate solutions, which typically include sale of products such as sensors, motors and controllers, sales of hours (project management, installation and commissioning), programming, and various documentation. This offering is especially targeting building owners, contractors, façade builders and fenestration manufacturers. Increased scope and sale of integrated offerings will drive top-line growth but potentially have a slightly diluting impact on the gross margin ratio.

The second area is service contracts. Service contracts provide a stable and recurring revenue as well as increased customer satisfaction. Service contracts will typically include annual inspection as well as service and maintenance of moveable components and repair of minor errors and damages. Service contracts are mostly relevant in conjunction with the sale of integrated projects. Service contracts will drive both top-line growth and margin expansion.

The third area is refurbishments. Based on the 32-year history of WindowMaster, many of the previous installed solutions are now ready to be refurbished and technological updated, and the target is to leverage the installed base for refurbishment projects and service work. Refurbishments will drive both top-line growth and margin expansion.

The strategy is supported by detailed strategic initiatives and actions across core markets and functions.

The new strategy is focused on organic growth initiatives. However, Management and Board will continually consider acquisitive growth opportunities to strengthen WindowMaster’s core business and market position. Acquisitive growth is not included in the financial targets for 2025 and provides additional growth potential.

Financial Targets 2025

The Board of Directors has committed to new financial targets for 2025 based on favorable market conditions confirmed by historically high order intake so far in 2022 as well as the adoption of the new strategy “Accelerate Core”.

Revenue is expected to grow organically by 10-15% p.a. from 2021 to 2025 (previous expectation 5-10%) and the EBT margin is expected to continually improve reaching a minimum of 10% in 2025 (EBITDA ~15%).

Revenue growth will be driven by positive underlying market trends and the need for more energy-efficient buildings. Integrated offerings will lead to increased scope and order sizes. Service contracts, geographical expansion and leveraging the installed base for refurbishments will drive increased top-line.

Increased profitability will to a large extent be driven by increased operating leverage as the top-line growth only requires minor increases in the fixed cost base.

Current performance and guidance for 2022

The guidance for 2022 is maintained. Turnover is expected to be in the range of DKK 220-235 mill. equivalent to 10% organic growth. EBITDA is expected to be between DKK 13-18 mill. Both revenue and EBITDA are expected to be higher in the second half of 2022 than in the first half in line with normal seasonality.

The first quarter of the year was marked by high uncertainty and significant cost increases related to constraints in the global supply chain. However, the implementation of permanent price increases at the beginning of the year as well as temporary price supplements in the second quarter are expected to mitigate the negative effects of cost increases incurred at the beginning of the year.

Order intake at the end of May 2022 was historically high. Order intake year-to-date amounted to DKK 123m (2021: DKK 98m) and 12-months-trailing order intake amounted to DKK 250m (FY 2021: DKK 224m), representing growth rates of 25% and 12%, respectively.

Statement by CEO Erik Boyter

Erik Boyter, CEO comments on the new strategy and the updated financial targets: “I am pleased to present our new strategy ‘Accelerate Core’. We have spent the last couple of years to solidify our market position, develop our product offering, and streamline our internal processes. Essentially, we have built a scalable platform. We are now accelerating in the areas where we have already been successful. We have a clear competitive edge when it comes to sustainability and intelligent indoor climate solutions as confirmed by the order intake so far this year, and we are looking into a very promising addressable market in the coming years. That is the reason why we have raised the bar and committed to higher revenue and profitability in 2025. We will continue to scout the market for interesting acquisitions, but we see ample opportunities for organic growth, which is our primary focus.”

Video Call on 10 June 2022 at 10.00 am

Investors and analysts are invited to participate in a video call on Friday, 10 June 2022 at 10 am. Erik Boyter, CEO and Steen O. Sørensen, CFO will elaborate on the new strategy and mid-term financial targets and address the current market developments. The presentation will be followed by a Q&A session. Link to the meeting: https://hcandersencapital643.clickmeeting.com/windowmaster/register