Twelfth consecutive quarter of year-on-year growth
First Quarter 2024
• Revenue for Period: SEK 32.1 million (SEK 26.4 million)
• Operating Result: SEK 7.4 million (SEK 6.5 million). Operating Result excluding revaluation of existing hedge contracts: SEK 12.0 million (SEK 5.4 million), yielding 37% operating margin
• Earnings per Share: SEK 0.87 per share (SEK 0.89 per share). Earnings per Share excluding revaluation of existing hedge contracts: SEK 1.70 per share (SEK 0.76 per share)
• Cashflow from Operations: SEK 15.2 million (SEK 8.8 million)
• Highest first quarter on record; 3.9 million Engine Equivalents
• Cumulative CO2 savings exceeds 60 million tonnes; on pace for 100 million tonne target by 2028
• Upturn in installation activity; positive installation outlook for 2024-2025
• Installed Base: 57 (57) installations 25 (25) fully automated systems, 25 (25) mini-systems and seven (seven) tracking systems in 13 (13) countries
CEO Message
Positive start for series production
The first quarter provided a positive start to the year with January, February and March each achieving all-time highs for series production. Overall, series production for the first quarter finished at 3.9 million Engine Equivalents, providing 18% year-on-year growth. Sampling Cup shipments also started positively, with a 36% increase compared to the year-ago period. Together, the increases in series production and consumables shipments contributed toward total revenue of SEK 32.1 million for the quarter, providing a 22% year-on-year increase. During the period, 95.4% of the total revenue was derived from recurring revenue related to the Production Fee levied for each Engine Equivalent, plus consumables sales and software licence fees.
The operating result for the period finished at SEK 7.4 million, corresponding to a 23% operating margin. While the operating result represented a 14% year-on-on-year increase, it was strongly affected by recent swings in the USD / SEK exchange rate, resulting in unrealised revaluation losses of SEK 4.6 million from existing hedge contracts. The adjusted operating result, excluding unrealised revaluation losses, is SEK 12.0 million, corresponding to a 37% operating margin. With a positive growth outlook, and benefitting from cost reductions implemented during 2023, we expect to improve upon our 2023 full-year operating margin of 31.8% by year-end, making a positive step toward our long-term goal of 40% by 2028.
While the first quarter marked the twelfth consecutive quarter of year-on-year series production increases, the volume of 3.9 million Engine Equivalents was slightly below the run-rate of 4.0 million Engine Equivalents established during the second half of 2023. Compared to full-year 2023 (3.7 million Engine Equivalents), the first quarter provided 5% growth and we maintain our ambition to achieve double-digit growth for the full-year. During the quarter, the production breakdown was approximately 53% commercial vehicle, 29% super-duty pick-up, 10% full-size pick-up, 4% mid-size pick-up and SUV, and 4% off-road equipment. With our focus on large vehicles, we estimate that the improved fuel efficiency of the vehicles that use our technology saved approximately 2.4 million tonnes of CO2 during the first quarter. This increases our cumulative contribution to more than 60 million tonnes, keeping us on pace to meet our goal of 100 million tonnes of CO2 reduction by 2028.
The growth during the remaining three quarters will depend on three key levers: the previously announced mid-year stoppage of one of our high volume programmes; the continued ramp of the Traton Group 13 litre commercial vehicle engine; and, the start of production of a new family of 11, 13 and 16 litre commercial vehicle engines at First Automobile Works (FAW) in China. With the mid-year stoppage approaching, it is unlikely that the five million Engine Equivalent milestone will be reached before the stoppage occurs. However, the temporary decrease in volume does not change our goal to post double-digit growth in 2024 and we maintain our target to deliver double-digit CAGR through 2030, with growth beyond.
When the Traton order was received in 2019, the mature volume was said to be more than one million incremental Engine Equivalents per year. The Traton production started in 2022 with deliveries to Scania and was extended to Navistar in 2023. With the total volume not yet half-way through the ramp, the pending start of production for MAN during 2024 provides continued growth opportunities in 2024 and 2025. The FAW programmes also provide the opportunity for growth, with initial contributions expected during 2024, followed by stronger growth in 2025 and beyond. While the FAW production will provide significant contributions, the heavy duty commercial vehicle market in China is still evolving and it is not yet possible to determine the product mix between natural gas and diesel engines. With the current development, only the diesel version of the engines is planned to use CGI cylinder blocks.
Beyond Traton and FAW, the development pipe for conventional internal combustion engine applications remains strong, with ongoing SinterCast-CGI development programmes planned for launch through the 2028-2030 window. We also continue to actively support the development of small passenger vehicle engines for hybrid and range extender applications, and for large commercial vehicle engines running on net-zero fuels and hydrogen. These activities provide the opportunity for continued long-term growth, with an addressable market of approximately 15 million Engine Equivalents.
Aktiespararna added for commissioned research
On 5 April, SinterCast announced the addition of Aktiespararna as a new analyst for commissioned research. The comprehensive initiation report provided a strong assessment, ranking SinterCast as the number one investment opportunity among publicly listed Swedish companies for the combined 'Magic Rank' criteria of undervalued share price and high profitability. The report concludes that the main forecast scenario justifies a current share price of SEK 150 per share, representing 50% growth above the current market value. The suite of services provided by Aktiespararna will include published analyst reports after each quarterly report and investor presentations at Aktiespararna Investor Day events. The dates for SinterCast presentations in 2024 have been set for 11 June and 26 November.
Upturn in installation activity provides positive outlook
The first quarter also provided a positive start for early installation revenue and for the progression of ongoing planning discussions. Installation revenue for the first quarter amounted to SEK 1.2 million, up 71% year-on-year. The early revenue was primarily derived from equipment upgrades at two foundries in Europe and from the conclusion of the System 4000 commissioning at the Dongfeng Auto foundry in China. With the installation complete, Dongfeng Auto, an affiliate company of China's second largest automobile manufacturer, will seek CGI series production opportunities in the passenger vehicle, commercial vehicle and off-road sectors, both within the Dongfeng group and in the wider domestic market.
Installation discussions are currently underway for system upgrades and expansions, new CGI System 4000 installations, and new Ladle Tracker installations. We estimate that the current level of installation discussions provides the opportunity to exceed the historical average of SEK 8 million in installation revenue during 2024 and 2025.
SinterCast is the world's leading supplier of process control technology for the reliable high volume production of Compacted Graphite Iron (CGI). The properties of CGI enable improved transport solutions, increasing efficiency and reducing carbon emissions in passenger vehicle, commercial vehicle and industrial power applications. As a specialist supplier of precision measurement and process control solutions to the metals industry, SinterCast also supplies the SinterCast Ladle Tracker® and SinterCast Cast Tracker® technologies, to improve production efficiency and Industry 4.0 traceability in a variety of applications. With 57 installations in 13 countries, SinterCast is a publicly traded company, quoted on the Small Cap segment of the Nasdaq Stockholm stock exchange (SINT). For more information: www.sintercast.com
For more information:
Dr. Steve Dawson
President & CEO
SinterCast AB (publ)
Office: +46 150 794 40
Mobile: +44 771 002 6342
e-mail: steve.dawson@sintercast.com
website: www.sintercast.com
Corporate Identity Number: 556233-6494
This press release contains information SinterCast AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. This information was submitted for publication, through the agency of the President & CEO Dr. Steve Dawson, at 08:00 CET on 24 April 2024.
