WindowMaster International A/S: WINDOWMASTER HALF-YEAR REPORT 2024

Financial Highlights H1 2024 - Significant growth and record high Order Intake, Revenue and profitability
Order intake increased 19% (12 month running) to DKK 278.0m in H1 2024 (H1 2023: DKK 241.4m)
Revenue increased 22% to DKK 140.0m in H1 2024 (H1 2023: DKK 114.6m)
EBITDA increased 459% to DKK 17.0 (H1 2023: DKK 3.7) corresponding to an EBITDA margin of 12.1% (H1 2023: 3.2%)
The outlook for 2024 is maintained but with a precision that we expect to end in the high end of the range in revenue and EBITDA. Revenue is expected to be in the range of DKK 265-275m and EBITDA between DKK 28-33m. The guidance was changed on 7th June 2024 with reference to Company Announcement 46-2024.
FINANCIAL KEY FIGURES H1 2024
+------------------------------------+-------+-------+------+
|DKKm                                |H1 2024|H1 2023|Change|
+------------------------------------+-------+-------+------+
|Order intake (12 month running)     |278.0  |241.4  |+15%  |
+------------------------------------+-------+-------+------+
|Revenue                             |140.0  |114.6  |+22%  |
+------------------------------------+-------+-------+------+
|Gross Profit                        |65.7   |51.2   |+28%  |
+------------------------------------+-------+-------+------+
|Gross Margin %                      |46.9   |44.7   |      |
+------------------------------------+-------+-------+------+
|EBITDA                              |17.0   |3.7    |+459% |
+------------------------------------+-------+-------+------+
|EBITDA %                            |12.1%  |3.2%   |      |
+------------------------------------+-------+-------+------+
|Result after tax                    |1.8    |-8.6   |      |
+------------------------------------+-------+-------+------+
|Net working capital                 |34.8   | 45.9  |-24%  |
+------------------------------------+-------+-------+------+
|Cash flow from operations           |16.1   |5.1    |+315% |
+------------------------------------+-------+-------+------+
|NWC % of revenue (12 months running)|13.4%  |19.3%  |      |
+------------------------------------+-------+-------+------+
|Equity ratio % (net cash)           |19.0%  |19.2%  |      |
+------------------------------------+-------+-------+------+
MARKET ACTIVITY
In general, market activity (specification of projects) is high with respect to integrated offerings for full indoor climate solutions both for new buildings and for refurbishment of existing buildings and investments in intelligent fire safety and natural ventilation solutions are on the rise.
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 theEU's Green Deal and the REPowerEU-plan.Building renovation is one of the most important and efficient solutions to address both climate change and reduce 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 (12-months-trailing) amounted to DKK 278.0 at the end of June 2024 (end June 2023: DKK 241.4m). Order intake has increased continuously since Q2 2023 - a growth which appears to continue into Q3 2024. The increased activity relates both to projects, where WindowMaster is directly involved as well as to key account product sales which have recovered from the low levels seen in 2022 and the first half of 2023.
Quarterly developments in order intake
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FINANCIAL DEVELOPMENTS H1 2024
Revenue
Revenue in H1 amounted to DKK 140.0m (H1 2023: 114.6m) equivalent to an increase of 22%, primarily explained by the increased revenue from big key account customers and projects.
Quarterly developments in Revenue
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Gross profit
Gross profit amounted to DKK 65.7m in H1 (H1 2023: DKK 51.2m) equivalent to a gross margin of 46.9% (H1 2023: 44.6 %). The increase in the gross margin is related to customer and product mix. In June it was necessary to make a provision for bad debt in UK of slightly more than DKK 1m. Although all measures have been taken to mitigate risks, this is an inherent part of project business - as highlighted in the Strategy plan `Accelerate Core'
EBITDA
Operating profit (EBITDA) amounted to DKK 17.0m in H1 (H1 2023: DKK 3.7m) equivalent to an EBITDA margin of 12.1% (H1 2023: 3.2%). The increase in the EBITDA margin is explained by higher volume and operational leverage and thus a better utilization of the fixed cost base. In 2023, when activity was low, Management decided not to adjust the organization as the drop in activity was 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"- which has now proven to be the right decision as documented by the present financial development and our ability to accommodate growth.
Quarterly developments in EBITDA and EBIT
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Cash flow and working capital
Cash flow from operating activities in H1 amounted to DKK 16.1m (H1 2023: 5.1m) which relates to increased revenue and improved EBITDA. Working capital is increasing but less than the increase in revenue - and consequently cash conversion is improved. Cash flow from investment activities in H1 amounted to DKK -3.3m (H1 2023: -3.4m) and is on a low level. This is expected to go up in the 2nd half of 2024 - linked to investments in digitalization and renovation of properties.
At the end of H1, net working capital amounted to DKK 34.9m (End of 2023: 33.3m). Net working capital as a percentage of revenue decreased to 13.3% (End of 2023: 14.0%)
Cash and financial position
Net interest-bearing debt (including lease liabilites) at the end of H1 amounted to DKK 60.3m (End of 2023: 64.1m). The change is primarily related to the change in improved EBITDA. Access to capital and good banking relationships continues to be a source of competitive advantage.
Financial gearing calculated as NIBD/EBITDA amounted to 2.0 at the end of H1 (12 months trailing EBITDA). (End of 2023: 3.3). The target is to be below 2.0.
At the end of H1, Equity amounted to DKK 27.7m (End of 2023: 25.9), equivalent to an equity ratio of 19.0% (net cash) (End of 2023 17.7%). The target is to be above 30%.
Risks
WindowMaster is exposed to market risks including currency risks, interest risks, credit 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 2024 is maintained:
+-----------------------------+------------------------+----------------------+
|Announcement on 2024 guidance|No. 44 on 12. April 2024|No. 46 on 7. June 2024|
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|Revenue                      |DKK 255-265m            |DKK 265-275m          |
+-----------------------------+------------------------+----------------------+
|Revenue growth%              |7-11%                   |11-16%                |
+-----------------------------+------------------------+----------------------+
|EBITDA                       |DKK 25-29m              |DKK 28-33m            |
+-----------------------------+------------------------+----------------------+
|EBITDA%                      |10-11%                  |11-12%                |
+-----------------------------+------------------------+----------------------+
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 16 August 2024 at 13:30 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.