OptiCept Q2’24 earnings preview: Strong revenue growth expected

OptiCept will release its Q2 results on Thursday. We expect strong revenue growth mainly due to higher deliveries within FoodTech. Profitability is expected to remain negative due to the still low absolute revenue level. In the upcoming Q2 report, we are looking for any comments on the delivery progress of the large-scale order from FPS, as well as information regarding ongoing evaluations in both business areas.

High revenue growth expected

We anticipate OptiCept's Q2 revenue to land at 9.4 MSEK, which represents high growth of 326% year-on-year, albeit from low absolute levels. The revenue is expected to be driven by the FoodTech business area, which we estimate will constitute some 70% of total Q2 revenue. The business area’s revenue growth likely stems mainly from OliveCept installations in Spain. In the PlantTech segment, we expect growth to be driven by increased revenue from the commercial deal with APH in cut flowers, as well as increased volumes from CMPC and Aperam in cuttings. We expect the order book to remain at high levels, some 40-50 MSEK, due to a significant portion of the total order book is tied to not yet delivered OliveCept systems and orders from FPS.

Profitability still in the red

We expect the company to reduce operating costs, excluding COGS, by approximately 20% year-over-year as a result of cost-cutting measures. However, due to the still low absolute level of revenues, which do not yet cover fixed costs, we expect OptiCept's Q2 profitability to remain negative in all lines, with our EBITDA and EBIT estimates at -4.7 MSEK and -10.1 MSEK, respectively. In terms of cash flow, we expect the negative operating result and the increased working capital tied up in the production and delivery of the large order to FPS to put pressure on cash flow. However, we expect that the loan of 18.7 MSEK received in June will partially offset the negative operating cash flow.

Order book conversion and technology evaluations in focus

Our current full-year estimates for 2024 and 2025 are around 47 MSEK and 89 MSEK, respectively. In order for OptiCept to achieve these estimates, the company must ensure that deliveries to FPS remain on schedule, increase order intake and successfully convert more of the order backlog into deliveries. As such, we will be watching for any updates on the delivery progress of the large FPS order, as well as the ongoing evaluations with, e.g., Dole and Chrysal, which we believe will be critical to the company's business growth prospects. We also look forward to comments on the existing commercial contracts for OptiCept within PlantTech.