"We are closing a challenging quarter with clear signs of a weaker economy in Germany, and the postponed Curexa contract in the US. Japan delivered a strong quarter in local currency and we launched six new products targeting APAC and EMEA to support growth. For the QleanAir Group, currency adjusted revenue decreased by 5.9% in the quarter and amounted to MSEK 112.8, of which 64% were recurring revenues. The quarter has been affected with one-off costs of approximately MSEK 7 (non-cashflow items). Adjusted, the operating profit was MSEK 11.3 compared to MSEK 16.8 the previous year, " comments Sebastian Lindström, CEO at QleanAir.
CHALLENGING QUARTER WITH STABLE BASE OF RECURRING REVENUE
MSEK 113 Net revenue, -9%
MSEK 73 Recurring revenue, -4%
10.0% Adjusted EBIT margin, (13.5%)
July-September 2024 in summary
- Net revenue MSEK 112.8 (123.9), currency adjusted net revenue amounted to MSEK 116.5
- Recurring revenue MSEK 72.8 (75.8)
- Operating profit (EBIT) MSEK 4.2 (16.8), adjusted MSEK 11.3 (16.8)
- Operating margin (EBIT) 3.7% (13.5%), adjusted 10.0% (13.5)
- Earnings per share SEK -0.28 (0.70)
- Cash flow from current operations MSEK 3.4 (18.3)
January-September 2024 in summary
- Net revenue MSEK 346.7 (379.8), currency-adjusted net revenue amounted to MSEK 361.9
- Recurring revenue MSEK 222.0 (227.7)
- Operating profit (EBIT) MSEK 17,4 (54.4), adjusted MSEK 24.5 (57.0)
- Operating margin (EBIT) 5.0% (14.3%), adjusted 7.1% (15.0%)
- Earnings per share SEK 0.21 (2.55)
- Cash flow from current operations MSEK 22.7 (48.2)
- Procurement of financing through a new bank has been completed and transfer of bank will take place by January 2025 the latest.
Significant events in the third quarter
- QleanAir signs a new contract with the German space industry for a customized air cleaning solution
- QleanAir signs contract for another modular cleanroom project with a large IDN in Florida
- Postponement of Curexa Pharmacy project
- Healthcare System in Colorado, USA, purchases a QleanSpace cleanroom suite from QleanAir
Significant events after the end of the period
- The nomination committee appointed for the Annual General Meeting 2025
- Henrik Resmark, CFO at QleanAir, and QleanAir AB have mutually agreed that Henrik will leave the company in March 2025 for new challenges
- QleanAir expands product portfolio with the launch of six new solutions for optimization of air quality in professional environments
A WORD FROM THE CEO
We are closing a challenging quarter with clear signs of a weaker economy in Germany, and the postponed Curexa contract in the US. Japan delivered a strong quarter in local currency, and we launched six new products targeting APAC and EMEA to support growth. For the QleanAir Group, currency adjusted revenue decreased by 5.9% in the quarter and amounted to MSEK 112.8, of which 64% were recurring revenues. The quarter has been affected with one-off costs of approximately MSEK 7 (non-cashflow items). Adjusted, the operating profit was MSEK 11.3 compared to MSEK 16.8 the previous year. The decrease in profit is mainly a result of the currency effect of the yen and lower sales in Germany. Adjusted operating margin (EBIT) amounted to 10.0% (13.5). Sequentially, we improved the adjusted operating margin to 10.0% compared with 1.4% in the second quarter of 2024.
We remain firm in our focus on three priorities: Customer focus, sales efficiency and cost control. In combination with focused investments in growth, we will improve our margins.
CUSTOMER FOCUS AND SALES EFFICIENCY WHEN LAUNCHING NEW PRODUCTS
We continue our work towards more critical solutions for specific industrial challenges, which will make us more resilient in the current, weaker economy. This week, we launched six new products that our sales organization can offer our customers immediately.
CONTINUED FOCUSED INVESTMENTS IN EMEA
In EMEA, we continue to see cautiousness among our customers, particularly in Germany and Sweden, as a result of the weaker economy. It is more difficult to book customer meetings. It takes longer to close deals. As a result of this, during the quarter we have a negative growth of 8.8%. The new product launches will generate growth and strengthen our margins in EMEA. We continue our regional efforts to strengthen our proximity to customers, our investments in France shows continued strong growth.
SALES EFFICIENCY DRIVES GROWTH AND PROFITABILITY IN APAC
APAC continues to be the driving force in the QleanAir Group. Japan contributes with significant revenue, strong earnings and cash flow in local currency. However, the Japanese yen has weakened
against the Swedish krona, which has had a negative impact on revenue of around MSEK 2.5 in the quarter. We see continued stable demand for Cabin Solutions and Air Cleaners.
COST CONTROL AND THE DISTRIBUTION STRATEGY IN FOCUS FOR PROFITABILITY IN AMERICAS
We have decided to review the distribution strategy to more effectively reach new customers. Despite a positive underlying regulatory environment, USP 797/800, we do not see a continuous order intake. QleanAir has a niche business in Americas, with more than 100 installed cleanrooms with ongoing service agreement.
The previously communicated delay of the Curexa contract in the US remains. The reasons for the postponement are completely beyond QleanAir's control but effects the revenue negatively in the third and fourth quarter 2024. We consider that we have good protection in our contract with Curexa to cover the costs incurred by the interruption and are pursuing the issue with the customer for compensation.
BUSINESS MODEL
Our business model consists of a combination of rental and sales, including service. Revenue amounted to MSEK 112.8 (123.9) for the quarter, which is a decrease of 8.9% and 5.9% currency adjusted. Our recurring revenue amounted to MSEK 72.8 (75.8), a decrease of 4.0%.
QleanAir cleans indoor air by reducing harmful particles. The working environment for people is improved. Furthermore, the quality of customers' products and the efficiency of their processes is improved. We work systematically to increase growth combined with profitability.
FUTURE OUTLOOK
We know that we will be under pressure during all of 2024, given the lower base of renewable contracts to financial companies in Japan, the weak yen and the weaker economy in Germany which is one of our largest markets. We know where we are heading. Our business model is circular, our products have a long life with our customers through our strong service model and we recondition the product by the end of a contract to give it a new lease of life with the next customer.
In conclusion, I would like to thank all our dedicated employees, as well as our customers and partners for their good cooperation.
Solna, November 8, 2024
Sebastian Lindström, CEO QleanAir AB
For more information, please contact:
Sebastian Lindström, CEO
sebastian.lindstrom@qleanair.com
+46 703 08 94 51
Henrik Resmark, CFO
henrik.resmark@qleanair.com
+46 702 60 09 17
About QleanAir
QleanAir is a niche premium provider of clean indoor environment solutions. The company's business model is based on rental contracts for modular solutions with a full-service offer. QleanAir's solutions are developed using filter technology that traps, filters and recycles indoor air. The company's main markets are EMEA, APAC and the Americas. QleanAir's head office is located in Solna, Sweden, and the share is traded on Nasdaq First North Premier Growth Market, ticker QAIR. FNCA Sweden is Certified Advisor. For more information go to qleanair.com.
This information is information that QleanAir AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 2024-11-08 08:00 CET.
