Exel Composites' Financial Statements Release Q1-Q4 2023: 2023 revenue EUR 96.8 million and adjusted operating profit EUR -2.4 million

Q4 2023 in brief

• Order intake decreased by 8.0% to EUR 23.6 million (Q4 2022: 25.6)
• Revenue decreased by 28.8% to EUR 22.1 million (31.0)
• Adjusted operating profit decreased to EUR -1.3 million (0.9) and adjusted operating profit margin to -5.9% (3.0%)
• Operating profit decreased to EUR -3.7 million (-1.7) and operating profit margin to -16.7% (-5.5%)
• Earnings per share was EUR -0.47 (-0.32)

Q1-Q4 2023 in brief

• Order intake decreased by 21.3% to EUR 98.1 million (Q1-Q4 2022: 124.7)
• Revenue decreased by 29.3% to EUR 96.8 million (137.0)
• Adjusted operating profit decreased to EUR -2.4 million (8.0) and adjusted operating profit margin to -2.5% (5.9%)
• Operating profit decreased to EUR -4.9 million (3.0) and operating profit margin to -5.0% (2.2%)
• Earnings per share was EUR -0.77 (0.19)

Guidance for the full year 2024

Exel Composites expects revenue to increase and adjusted operating profit to increase significantly in 2024 compared to 2023.

Dividend proposal

The Board proposes to the Annual General Meeting that no dividend be paid for 2023 (EUR 0.20 per share for 2022) based on the adopted financial statements for the financial year ended on 31 December 2023.

President and CEO, Paul Sohlberg

Challenging market environment continued to weigh on our profitability despite counteractions

The fourth quarter of 2023 progressed in line with our expectations. Revenue was 22.1 million (31.0), which represents an increase of 7.5% from the previous quarter, and order intake amounted to 23.6 million (25.6), an increase of 3.3% million compared to Q3. As we had expected, customers in our main markets continued careful management of inventories and new orders. It was pleasing to see that Transportation, one of our identified growth areas, had a strong quarter.

As a result of the continued low revenue our adjusted operating profit was EUR -1.3 million for the quarter (0.9). We continued decisive actions to manage our working capital, and costs, and as a result we achieved a quarterly cash flow of EUR 0.8 million from operating activities.

Our revenue in 2023 decreased from 2022. This was impacted by the challenging overall market environment, customer destocking of inventories accumulated due to Covid-19 pandemic and supply chain disruption, as well as the temporary demand decrease and postponement of business in the wind power equipment market. Exel's revenue decreased in all main geographies and customer industries, except in the Defense industry.

For these reasons the adjusted operating profit for the year decreased to -2.4 million (8.0). During the year we took multiple successful actions to activate sales and contain costs, but these were not sufficient to offset the decline in revenue. In 2023 costs were lower than in 2022 mainly due to EUR 4.8 million lower personnel costs and EUR 1.4 million savings in operational fixed costs. Our organization did well in securing cash flow from operations, which was positive EUR 4.4 million (6.8) in 2023, and a favorable result in an otherwise challenging year.

Strategy implementation continued and prepared us for the future

Exel launched a new transformative strategy in October 2023 setting us on the course of organic growth and solid profitability. We launched new Group targets including updated long-term financial targets and began immediately implementing our new strategy. In the first days of 2024 we announced adoption of a new operating model simplifying our structure into two global business units. We will align resources fully within these businesses: Engineered Solutions Business Unit concentrating on tailored solutions in multiple industries, and Industrial Solutions Business Unit concentrating on selected applications with significant growth potential. Mr Juha Honkanen and Ms Kathy Wang were promoted from within Exel to take the lead of the new business units, respectively.

We have a clear vision of Exel's future footprint, and we are working to align with it. In 2023 we completed the downsizing of the pultrusion operations in Runcorn, UK and put the facility up for sale and completed the sale of the real estate related to closed manufacturing facility in Nanjing, China. In addition, we completed the first of our three strategic factory reviews by refocusing our US operations. In January 2024 we announced the second strategic factory review concerning Belgium. Our strategic wind program and factory construction in India, announced in July 2023, are progressing according to plan.

Safety, sustainability and quality are important pillars of our strategy. We intensified our focus on safety, and we are pleased by having reached the lowest lost time incident rate of 6.0 (10.8) in Exel's history, on our way to Zero Harm. During the year we achieved quality certificates for APQP4Wind in India and China and are readying us for automotive IATF 16949 certification. We continue to adopt solar and sustainable energy sources in our operations and furthering circularity by waste recycling and management.

Outlook for 2024

Exel Composites expects revenue to increase and adjusted operating profit to increase significantly in 2024 compared to 2023. Our opening backlog for 2024 is higher than it was a year ago. However, the visibility to market development is still limited, and considering the overall economic sentiment we expect demand to be somewhat soft in the first half of 2024 while Exel will continue to have free production capacity. We at Exel have a clear execution plan. We look forward to 2024 with confidence.

Exel Composites' ambition is to distribute a minimum of 40% of net income in dividends when permitted by the financial structure and growth opportunities. Based on this dividend policy, the Board suggests that no dividend to be paid for 2023. 

I would like to thank all Exel employees for their hard work and dedication as well as our customers and other stakeholders for the continued cooperation and trust.

Consolidated key figures

EUR thousand Q4 Q4 Change Q1-Q4 Q1-Q4 Change
2023 2022 % 2023 2022 %

Revenue 22,074 30,984 -28.8 96,815 136,988 -29.3
Operating profit -3,676 -1,715 -114.4 -4,863 3,002 -262.0
% of revenue -16.7 -5.5 -5.0 2.2
Adjusted operating profit 1) -1,311 918 -242.8 -2,446 8,029 -130.5
% of revenue -5.9 3.0 -2.5 5.9
EBITDA -177 54 -425.7 3,832 10,123 -62.1
Adjusted EBITDA 1) -2 2,686 -100.1 4,059 15,149 -73.2
Profit before tax -5,661 -5,076 -11.5 -8,254 3,600 -329.3
Profit for the period -5,597 -3,826 -46.3 -9,309 2,145 -534.0
Profit for the period -5,566 -3,781 -47.2 -9,130 2,293 -498.1
excluding non-controlling
interest
% of revenue -25.2 -12.2 -9.4 1.7
Shareholders' equity 17,687 30,385 -41.8 17,687 30,385 -41.8
Interest-bearing liabilities 43,790 48,498 -9.7 43,790 48,498 -9.7
Cash and cash equivalents 10,952 17,397 -37.0 10,952 17,397 -37.0
Net interest-bearing 32,838 31,101 5.6 32,838 31,101 5.6
liabilities
Net debt to adjusted EBITDA 2) 8.1 2.1 294.6 8.1 2.1 294.6
Capital employed 61,477 78,883 -22.1 61,477 78,883 -22.1
Return on equity, % -108.5 -46.9 -131.4 -38.7 7.0 -655.8
Return on capital employed, % -21.4 -8.4 -153.8 -6.8 3.7 -280.9
Equity ratio, % 20.9 26.9 -22.2 20.9 26.9 -22.2
Net gearing, % 185.7 102.4 81.4 185.7 102.4 81.4
Net cash flow from operating 753 4,361 -82.7 4,445 6,767 -34.3
activities
Net cash flow from investing -865 3,968 -121.8 -3,076 2,018 -252.4
activities
Capital expenditure 815 1,150 -29.2 3,523 4,592 -23.3
% of revenue 3.7 3.7 3.6 3.4
Research and development costs 966 850 13.7 3,711 3,426 8.3
% of revenue 4.4 2.7 3.8 2.5
Order intake 23,583 25,645 -8.0 98,142 124,735 -21.3
Order backlog 29,765 29,110 2.2 29,765 29,110 2.2
Earnings per share, diluted -0.47 -0.32 -47.2 -0.77 0.19 -498.1
and undiluted, EUR
Equity per share, EUR 1.47 2.53 -41.76 1.47 2.53 -41.76
Average share price, EUR 2.65 5.37 -50.7 3.60 6.30 -42.9
Average number of shares, 11,854 11,854 0.0 11,854 11,849 0.0
diluted and undiluted, 1,000
shares
Employees, average 631 721 -12.4 667 732 -8.9
Employees, end of period 623 721 -13.6 623 721 -13.6

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

Revenue by customer industry

Q4 Q4 Change Q1-Q4 Q1-Q4 Change
EUR thousand 2023 2022 % 2023 2022 %
Buildings and infrastructure 6,075 8,059 -24.6 26,003 32,456 -19.9
Equipment and other industries 3,888 4,347 -10.6 18,469 23,127 -20.1
Wind power 1,670 5,492 -69.6 7,535 26,765 -71.8
Machinery and electrical 3,774 5,183 -27.2 15,887 19,705 -19.4
Transportation 4,677 3,334 40.3 15,712 17,380 -9.6
Defense 1,016 1,926 -47.3 7,895 7,524 4.9
Telecommunications 974 2,645 -63.2 5,314 10,031 -47.0
Total 22,074 30,984 -28.8 96,815 136,988 -29.3

Revenue by region1)

Q4 Q4 Change Q1-Q4 Q1-Q4 Change
EUR thousand 2023 2022 % 2023 2022 %
Europe 13,780 18,261 -24.5 64,372 76,651 -16.0
North America 4,425 7,642 -42.1 18,343 37,272 -50.8
Asia-Pacific 3,061 5,043 -39.3 11,638 20,930 -44.4
Rest of the world 807 38 2,026.8 2,461 2,135 15.3
Total 22,074 30,984 -28.8 96,815 136,988 -29.3

1) Revenue by customer location

Vantaa, 16 February 2024

Exel Composites Plc
Board of Directors

Financial results briefing

Exel Composites will hold a financial results briefing regarding the Q1-Q4 2023 results today at 12:30 EET. To participate in the online event, please register in advance by sending an email to investor@exelcomposites.com.

This release is a summary of Exel Composites' Financial Statements Release Q1-Q4 2023. The complete report is attached to this release as a pdf and is also available on Exel Composites' website at www.exelcomposites.com.

For further information, please contact:

Mikko Rummukainen, CFO, tel. +358 20 7541 335, mikko.rummukainen@exelcomposites.com

Sanna Ahvenniemi, Head of Investor Relations, tel. +358 40864 3000, sanna.ahvenniemi@exelcomposites.com

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 www.exelcomposites.com.