QLEANAIR INTERIM REPORT Q1 2022 - AIR CLEANERS INCREASED REVENUE BY 22%. ORDER INTAKE INCREASED BY 15%

2022-05-12 08:00:00

“QleanAir continues to deliver strong growth in EMEA from our sales of Air Cleaners and Cleanrooms. We increased sales in EMEA from MSEK 54.5 to MSEK 63, an increase of 16 percent while order intake in EMEA increased by 19 percent from MSEK 57.8 to MSEK 68.9 compared with the previous year. In APAC, sales were stable at MSEK 47.6 (48.4), primarily from Cabin Solutions. Demand was also stable despite continued closures in the quarter due to the pandemic. Order intake in APAC increased by 1.9 percent compared with the previous year. The Americas had weak development in the quarter. I am pleased that we continue to execute our strategy and increase our sales of Air Cleaners and Cleanrooms. We deliver a strong gross margin of 72.5%, despite major challenges regarding material prices and component availability. We are growing our installed base by 16% and the volume of cleaned air delivered by 27.2% compared with the previous year,” Christina Lindstedt, CEO, remarks.

AIR CLEANERS INCREASED REVENUE BY 22%. ORDER INTAKE INCREASED BY 15%

January–March 2022 in summary

  • Net revenues totaled MSEK 115.4 (110.5), currency-adjusted net revenues totaled MSEK 112.5
  • Installed units 11,551 (9,964)
  • Recurring revenue MSEK 69.0 (64.8)
  • Order intake MSEK 117.0 (101.9)
  • EBITDA1 MSEK 25.2 (26.9)
  • EBITDA margin 21.8% (24.3%)
  • Operating profit2 (EBIT) MSEK 17.6 (19.9)
  • Operating margin 15.2% (18.0%)
  • Profit for the period MSEK 13.7 (20.8)
  • Earnings per share SEK 0.92 (1.40)
  • Operating cash flow MSEK -0.2 (24.3)

Significant developments during the first quarter

  • QleanAir renews contract with Porsche worth MEUR 2
  • QleanAir announces a major renewal order from the German school sector.

Significant events after the end of the period

  • QleanAir increased delivery of clean indoor air to 5.66 billion cubic meters per month at the end of the first quarter
  • QleanAir enters new market segment in Japan, announces first two orders for industrial Air Cleaners

CEO Comment

In APAC, Japan continues to deliver
In Japan, towards the end of the quarter, society continued to open after closures during the COVID-19 pandemic, and thus a larger part of the workforce was back in the offices, which benefits QleanAir as office environments are our primary customer segment in Japan. The opening up of society will have a continued positive impact on the demand for our solutions in 2022. Sales in Japan were in line with the previous year, with a strong focus on renewal contracts and a strong contribution to good gross margin levels for QleanAir overall. We continue to further develop our operations in Japan and introduce Air Cleaners to more customer segments, such as warehousing and production, and strengthen our product offering within Cabin Solutions. This paves the way for continued good growth opportunities for QleanAir in Japan, in the short and long term. After the end of the period, we have continued to expand our sales force in Japan to drive growth.

Growth in EMEA, in both Air Cleaners and Cleanrooms
We continue to deliver growth in Europe, plus 16%. We are growing our sales in both Air Cleaners and Cleanrooms. At the same time, Cabin Solutions is declining marginally. In Europe, Germany and Sweden remain responsible for most of the growth. During the quarter, we announced a renewal deal with Porsche worth MSEK 20.5. We also announced the renewal of a contract for a large installation for a school system in Ludwigshafen. The contract runs for two years at a value of approximately MSEK 4.2. The sales growth of Air Cleaners in EMEA primarily came from our core segments in warehousing, logistics and production and office environments. We see continued strong demand for Air Cleaners in EMEA. We also delivered growth in the clean room business in EMEA, which is an important focus area for us. We continue to invest in resources to create further growth in Cleanrooms with a new global product manager. We see good opportunities to expand our cleanroom operations to more countries in Europe.

Order intake in EMEA increased by 19% during the quarter. In many significant markets in Europe, we are not or only partially represented at present. Continuing to build distribution, with our own sales force and through collaborations, is something we will continue to invest in 2022 and beyond. In the first quarter, we hired a new salesperson in France and increased our sales force in Germany.

The Americas are still a challenge
In the USA, which is our smallest market in terms of sales, 4% of total sales in the quarter, we have had a low level of sales and thus also low profitability for a longer period. In the USA, we have currently established our operations within Cleanrooms in hospital pharmacies, with relatively long decision cycles that were also hit hard during the COVID-19 pandemic. We have a significant installed base of cleanrooms in the United States, a competitive offering, strong customer relationships, with a high proportion of satisfied, returning customers and a competent and dedicated team on site. We have the potential to grow our cleanroom sales in the hospital sector as well as to enter customer segments where we are successful in EMEA, such as the MedTech and Life Science sectors. We remain convinced that we can increase the pace of our operations in the United States, but it will take longer than we expected. Order intake increased to MSEK 6.8.

Continued very good profitability in the underlying business, investments in marketing, business development and sales resources
During the first quarter, we experienced the outbreak of war in Ukraine with all its human suffering and devastation. The war in Ukraine has led to rising material prices and disruptions in global supply chains and a more uncertain market situation. QleanAir's business model has a high proportion of recurring revenue, 60%, from solutions that are already installed at the customers. This means that we are doing well during this turbulent quarter. This in part is because we entered the year with a relatively high inventory level, which was a result of the long periods of disruptions in the supply chains in 2021. We are also working to implement price increases in certain parts of the business. As a result, we delivered a strong gross margin of 72.5%. We continue to invest in growth. During the quarter, we increased our investments in marketing and business development. We also recruited additional sales resources for our operations in EMEA. All in all, this meant that we had an operating margin of 15.2 (18) percent, which was lower than the previous year.

Growth of 16 percent of the installed base increased the volume of clean air
We continue to grow our installed base, which increased by 16 percent in the quarter. The amount of clean air delivered increased by 27.2% in the quarter. The growth in the installed base was primarily in Air Cleaners, where we have a lower average price than in Cabin Solutions, which explains why the growth in sales is not at the same level as the growth in the installed base. Sustainability has always been a central part of QleanAir's offering and business model. Since 2015, we have measured the volume of clean air and are proud to be involved and contribute to a healthier, safer, and more productive workplace for more and more customers every quarter. Our solutions also help strengthen product durability, performance, and energy consumption. Awareness of the importance of clean indoor air increased significantly during the pandemic, and we see that this has contributed to an increased demand for advanced air cleaning solutions. An increase that we expect to continue in the medium and longer term.

Outlook
QleanAir has a strong focus on profitable growth. We see good opportunities to introduce our product portfolio in many more markets. The air cleaning problems we solve are global problems, and our solutions are global. In EMEA, Germany and Sweden are where we particularly have significant market positions. We can continue to grow there, as well as in several other EMEA countries. In APAC, Japan is our big market, and their society is on its way back after two years of pandemic. We see good opportunities to continue to grow in Japan within our Cabin Solutions, and to establish ourselves in more of our Air Cleaner customer segments. In the Americas with the USA, we still have a journey to make before we reach the growth rate and profitability that we desire. But we remain convinced of the potential and opportunities in the US, both for Cleanrooms and for our Air Cleaner business. In addition, we have many other unaddressed geographies. As part of our growth strategy, we will continue to invest in innovation and marketing. We continue to add sales resources and develop our distribution partnerships to reach more customers with solutions for healthy working environments.

I would like to take this opportunity to thank the entire team at QleanAir for a fantastic job and our customers and partners for a great collaboration. Together, we are contributing to a healthier and safer society.

Christina Lindstedt, CEO, QleanAir
Solna, May 12, 2022

MFN