Soltech Energy Sweden AB (publ) quarterly report for the period July-September 2022
SOLTECH DELIVERS 44% ORGANIC GROWTH
CEO comment:
Soltech's third quarter 2022 shows an impressive organic growth of a whopping 44 percent, which I am very proud of. We don't only acquire companies, by doing so we also develop and enhance growth within the Soltech family. We reach SEK 482.5 million in revenue, which corresponds to 119 percent in growth adjusted for Advanced Soltech. However, we still have negative figures in terms of results, which is something that we have great focus to turn around going forward, not least by increased synergy effects. Soltech should not be an speculative company with low or non-existent revenues.
We will soon exceed 2 MDR in revenue and there are great opportunities for us to achieve increased profitability through synergy effects from this large revenue. Not least are synergies between the companies an even greater focus going forward.
THIRD QUARTER IN BRIEF
• The group's revenues during the quarter amounted to SEK 482.5 (267.2) million, an increase of 81%. Adjusted for Advanced Soltech*, the group's revenue amounted to SEK 482.5 (220.1) million, an increase of 119%
• The group's organic growth amounted to 44% (39%) and was driven by high demand for solar energy solutions.
• The group's earnings before depreciation (EBITDA) amounted to -55.3 (29.3) MSEK. Adjusted for Advanced Soltech*, the group's EBITDA amounted to -59.9 (-6.9) MSEK. EBITDA has been positively affected by results from shares in associated companies with SEK 4.6 million. EBITDA has been negatively affected by profit effects from the Neab group of -44.5 MSEK and, in addition to this, also affected by prevailing component shortages and price increases for construction components. The price increases above all affect the group's fixed price projects that were agreed before the price increases. During the quarter, the group also invested in both new acquisitions and existing subsidiaries, which continued to drive increased costs.
• The group's operating profit (EBIT) amounted to SEK -84.8 (4.6) million. Adjusted for Advanced Soltech*, EBIT amounted to -89.4 (-18.2) MSEK. EBIT has, in addition to the effects on EBITDA mentioned above, been affected by increased depreciation as a result of acquisitions.
• The period's profit after tax amounted to -91.1 (-10.6) MSEK.
• The period's cash flow from operating activities amounted to -33.3 (-116.9) MSEK and has been affected by investments in existing operations and increased inventory levels to secure deliveries to existing projects.
• The period's cash flow for the group amounted to SEK 98.6 (399.6) million. Similar to the previous year, the cash flow has been affected by the completed new issue in the quarter of SEK 186 million (SEK 84 million has been added after the end of the reporting period).
• Earnings per share amounted to -0.90 (-0.19).
• During the quarter, the Neab group contributed with total revenues of -4.7 MSEK and EBIT of -33.5 MSEK. In addition to this, the decided bankruptcy has led to non-recurring costs of -11 MSEK, which meant that the total profit impact from the Neab group and related costs amounted to -44.5 MSEK in the quarter.
• The war in Ukraine has an indirect effect on the group's costs and the price development of the components required for the manufacture of solar cell installations, roof installations, electrical installations, and facades. Soltech has no sales to Russia or Ukraine.
THE FIRST NINE MONTHS IN BRIEF
• The group's revenues amounted to SEK 1,207 (674) million, an increase of 79%. Adjusted for Advanced Soltech, revenue amounted to SEK 1,207 (554.3) million, an increase of 118%.
• The group's organic growth amounted to 39% (42%) and is primarily driven by high demand for solar energy solutions.
• The group's earnings before depreciation (EBITDA) amounted to -124 (50.3) MSEK. Adjusted for Advanced Soltech*, the group's EBITDA amounted to -131.2 (-38) MSEK. EBITDA has been positively affected by results from shares in associated companies with SEK 7.2 million. EBITDA has been negatively affected by profit effects from the Neab group of SEK -71.6 million and has also been negatively affected by the previously mentioned price increases on components. During the year, the group continued to invest in both new acquisitions and existing subsidiaries, which drives increased costs.
• The group's operating profit (EBIT) amounted to -192.6 (-15.6) MSEK. Adjusted for Advanced Soltech*, EBIT amounted to MSEK -199.8 (-67.1) and has, in addition to the above-mentioned effects on EBITDA, been affected by increased amortization of goodwill as a result of acquisitions.
• The period's result after tax amounted to -202.4 (-60.6) MSEK.
• The period's cash flow from operating activities amounted to -146.5 (-72.7).
• The period's cash flow for the group amounted to SEK -87.5 (272.3) million.
• Earnings per share amounted to -1.88 (-0.43).
• In 2022, the Neab group contributed with total revenues of SEK 28.1 million and EBIT of SEK -60.6 million. In addition to this, the decided bankruptcy has led to non-recurring costs of SEK -11 million, which meant that the total profit impact from the Neab group and related costs amounted to SEK -71.6 million.
SIGNIFICANT EVENTS DURING THE THIRD QUARTER
Significant events in subsidiaries:
• The subsidiary Rams El has won two new deals regarding electrical installations for schools in Gothenburg. The order value for the two new projects amounts to SEK 21 million.
• The subsidiary ESSA has received an assignment from the real estate company Örebroporten Fastigheter AB for a facade contract at Stadsbyggnadshuset, where part of the facade consists of building-integrated solar cells. The entire facade is expected to be commissioned in the spring of 2023 and the order value amounts to approximately SEK 23.6 million.
• The subsidiary Soltech Energy Solutions has signed an agreement with the municipal energy company Varberg Energi for a large battery park in Varberg that will contribute to stabilizing the electricity grid and optimizing power output. The total investment for the battery park amounts to upwards of SEK 100 million.
• A long-term electricity trading agreement has been concluded between the municipal energy company Nybro Energi and Soltech Energy Solutions. The agreement involves PPA solutions (Power Purchase Agreements) for large-scale solar installations.
Acquisition:
On July 1, Soltech acquired 100% of the shares in TG's El i Finspång AB and the wholly owned subsidiary Smart Solkraft.
• On 1 September, Soltech acquired 80% of the shares in Kalema E-Mobility AB (E-Mobility) with access on the same day. The acquisition is Soltech's first purely electric car charging company with excellence in electric car charging projects for companies and private individuals but also in solar energy services.
• On 21 September, Soltech acquired 100% of the shares in Takab i Jönköping AB (TAKAB) with access on 3 October. TAKAB has around 30 employees who work from the company's headquarters in Jönköping.
International acquisitions:
On 22 June, Soltech acquired 65% of the shares in the Spanish solar energy company Sud Energies Renovables SL with access on 5 July. This establishes the group in the strongly growing Spanish solar energy market. The acquisition is financed entirely from own cash and with newly issued Soltech shares.
Other:
The board of Soltech Energy AB (publ) decided, with the support of the authorization of the general meeting, to carry out a new share issue of approximately SEK 228 million with preferential rights for existing shareholders and possible over-allotment. The rights issue was oversubscribed, and the company received approximately SEK 270 million before issue costs.
SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD
• On October 14, the Neab Group filed for bankruptcy. At the time of the acquisition, the Neab group was a clear turn-around case that Soltech worked actively to turn around. The overall assessment on the basis of the decision is that the Neab group will be financially insolvent for a long time to come and that there are no conditions to continue the business. Bankruptcy trustees were appointed on 14 October and from this date Soltech no longer has controlling influence over the company. This means that from this date the Neab group will not be consolidated and will not have any financial impact from 2023 onwards. In quarter 3, the Neab group contributed with turnover of -0.2 MSEK and EBIT of -33.5 MSEK and for the first nine months of the year with sales of 36.5 MSEK and EBIT -71.6 MSEK. This also includes restructuring costs as a result of the bankruptcy of SEK 11 million. During the past 12 months, Soltech has worked actively to turn around the financial situation in the Neab group both via additions and via the addition of personnel resources. As a result of the deconsolidation, during the fourth quarter, Soltech will receive an operating income not affecting cash flow of a preliminarily estimated SEK 49 million. Soltech does not expect any further effects or costs from the Neab group in the coming quarters.
• The subsidiary Soltech Energy Solutions has signed an agreement for a roof-mounted solar cell installation that will measure approximately 9,400 square meters and consist of 3,624 solar panels. When completed, the solar cells will have an installed output of 1,975 kWp and will account for an electricity production that covers 30% of the property's electricity needs. The solar cell plant is expected to be commissioned in the spring of 2023.
• On October 28, Soltech Energy Sweden AB acquired 20% of the shares in the subsidiary Takrekond i Småland AB with access on the same day. Soltech Energy now owns 100% of the company and the acquisition of the remaining shares in the company is part of the work to continue strengthening Takrekond's transformation towards becoming a solar roof company.
*Advanced Soltech Sweden AB (ASAB) was separately listed on the Nasdaq First North Growth Market on October 29, 2021, and was thus deconsolidated from the group, which affects the comparative figures for 2021
The quarterly report and other financial reports are available at: https://soltechenergy.com/investerare/finansiella-rapporter-kalender/
