Equipmake Holdings - Trading Update for the year ended 31 May 2024
15/07/2024 07:00
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RNS Number : 3148W Equipmake Holdings PLC 15 July 2024
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 as it forms part of UK domestic law by virtue of
the European Union (Withdrawal) Act 2018 ("MAR").
15 July 2024
Equipmake Holdings plc
("Equipmake", the "Company" or the "Group")
Trading Update for the year ended 31 May 2024
Equipmake, a market leader in engineering-driven differentiated
electrification technologies, products and solutions across the automotive,
truck, bus and speciality vehicle industries, announces a trading update for
the year ended 31 May 2024 ("Year").
Corporate Highlights
· During the Year the Company strengthened its leadership and talent
base as it further rolls out its commercialisation and growth plans:
o Nick Moelders was appointed Chief Operating Officer in January 2024;
o Tony Ratcliffe was appointed Chief Financial Officer and Company Secretary
in April 2024;
o Jinsong Dai joined as VP Sales and Business Development in May 2024;
o All these new hires have a strong pedigree of delivering significant
growth in fast moving international technology businesses and they are already
positively impacting the business.
· The Company raised £4.1 million of new funds in February 2024. The
Board is grateful for the support from existing shareholders and is pleased to
welcome a number of new shareholders.
· The Company announced a number of significant new client / Tier 1
contract wins as it continues its growth trajectory.
Operational Highlights
The Year was transformational for the Company as it scaled its operations in
order to deliver greater volumes of business. The Company delivered attractive
revenue growth and increased margins from the manufacture and supply of
electric vehicle components and full zero emission drivetrain solutions. This
is the core strategic growth area for the business as customer traction
accelerates with Original Equipment Manufacturers ("OEMs") and Tier 1
suppliers (which are direct suppliers to OEMs).
· The largest increase in revenue was from Bus Repowering (where the
Company both supplies the full electric drivetrain solution and installs it in
the recipient vehicle) and this growth was driven by strong demand and a
naturally shorter sales cycle. This business line provides material revenues
and, most importantly, it showcases the quality, reliability and practical
usability of the Company's products and solutions, which the Company believes
has been invaluable in accelerating the interest in the Company's components
and powertrain supply business lines with targeted OEMs and Tier 1 suppliers.
· Equipmake was selected by a leading US aircraft, defence and
industrials conglomerate for the supply and installation of a prototype
electric-powered airside de-icing vehicle in September 2023. Following a
successful trial an order was placed for the supply of two drivetrain kits for
two further vehicles;
· Equipmake was selected by Perkins Engine Company Limited, a
subsidiary of Caterpillar Inc (the world's leading OEM of construction and
mining equipment and off highway plant) to leverage the Company's e-powertrain
technology and expertise to develop a motor and inverter for a new off-highway
hybrid system, in October 2023. In addition, a total of £3.2 million of
government grant funding was secured via the Advanced Propulsion Centre over
the 3.5-year life of the project;
· Equipmake won a development contract with H55, a leading aerospace
propulsion company, for the development and supply of electric motors for use
in electric aircraft, in January 2024;
· Equipmake won a contract with Big Bus Tours, the world's largest
sightseeing company, to repower ten double deck sightseeing buses, in
September 2023, with a further ten in January 2024;
· Equipmake won a £2.0 million contract with Golden Tours in February
2024 to install its zero-emission electric drivetrain solution into vehicles
in its fleet, with an additional contract awarded after the year-end, in June
2024, to supply and install zero emission electric drivetrain solutions in
additional vehicles; and
· Equipmake commissioned a new 50,000 square foot facility, providing
capacity for expansion in product manufacture and assembly, in the first
quarter of 2024.
Financial Highlights
· Revenue for the year ended 31 May 2024 is expected to be
approximately £8.1 million (2023: £5.1 million), representing a growth of
approximately 60% on the prior year;
· Excluding grant revenue, delivery against commercial agreements
generated revenue in the year of approximately £7.3 million (2023: £4.9
million), representing growth of approximately 47% on the prior year;
· Revenue from the supply of components and full zero emission
powertrains amounted to approximately £3.0 million combined, compared to
£2.4 million in the prior year, an increase of approximately 25%;
· Revenues from Bus Repowering amounted to approximately £3.9 million,
compared to £0.9 million in the prior year, driven by strong demand. Revenue
from technology, which includes engineering projects consultancy, amounted to
approximately £0.4 million in the Year, compared to £1.3 million in the
prior year, the reduction driven by a strategic focus towards only offering
engineering services around core products associated with OEM and Tier 1
partnerships, rather than offering bespoke general technical consulting
services;
· The Company has made significant progress in deepening its engagement
with global enterprise scale potential customers where, as expected, sales
cycles are longer;
· Cash balances at 31 May 2024 totalled £2.5m. The Company had no
debt, other than in relation to items held under finance leases. Phasing of
billing, which was weighted more towards the end of the financial year, meant
that receivables balances, at approximately £2.2 million, were
correspondingly higher than expected;
· Bus Repowering operations have scaled rapidly during the Year. This
has resulted in a number of additional unanticipated and under-estimated
direct costs and consequently the adjusted EBITDA(1) loss for the Year is
expected to be approximately £7.4 million (2023: EBITDA loss of £3.6
million);
· The Company recognises the labour-intensive nature of bus repowering
when working at modest volumes, across various platforms and with inconsistent
quality in recipient vehicles. Whilst efficiencies continue to improve, this
business line incurred material additional staff costs, including temporary
labour, in order to ensure deliveries met key customer agreed timelines; and
· Strategically more important, margins on components and powertrain
supply were solid and trended up positively.
Outlook
· The Company has established valuable relationships with a number of
OEMs, within its Components and Drivetrain Solutions businesses, a key focus
for the Company as it looks ahead. These include Perkins Engine Company
Limited, a subsidiary of Caterpillar Inc.; a leading South American truck, bus
and utility vehicle manufacturer; a leading US aircraft, defence and
industrials conglomerate; Emergency One, the largest manufacturer of fire
trucks in the UK; and Rev Group, the manufacturer of speciality industrial
vehicles, including fire trucks;
· The Company is also in advanced discussions with a number other
global OEM and Tier 1 suppliers, in relation to the supply of motors and
inverters. They are looking to leverage the Company's high performance,
differentiated offerings which include functional safety (a much sought after
compliance requirement for road vehicles) and system integration expertise;
· Equipmake expects to announce further partnership deals in due
course, which are expected to provide attractive multi-year product volume
visibility for the supply of components and drivetrain solutions, an area of
key focus going forward;
· Bus Repowering continues to provide meaningful revenues and has
already successfully demonstrated the quality, reliability and significant
benefits of the Company's solutions in real world operation on a wide variety
of platforms, helping to accelerate traction with OEMs and Tier 1 suppliers in
relation to components and drivetrain solutions supply. As the Company's
market position has strengthened, it now plans to rationalise the Bus
Repowering offering towards a limited number of platforms, with a view to
improving gross margins. In due course, the Company expects revenues from bus
repowering to plateau then reduce as it anticipates material demand growth for
the supply of its higher margin components and powertrain solutions, which
will be a key focus for the Group going forward;
· The Company is also progressing a number of cost-reduction
initiatives and manufacturing improvement programmes. These include switching
battery sourcing as well as other component level sourcing for inclusion in
the Company's portfolio of motors and inverters. The Company expects
significant cost reduction from batteries and overall cost reductions to
benefit gross margins from the second half of the current financial year;
· The Company intends to continue to strengthen its commercial and
product management team, particularly in the US and mainland Europe in order
to further develop and closely manage key relationships with existing and
potential OEM and Tier 1 partners;
· Following its first licensing agreement with Sona Comstar (a leading
automotive industry supplier in India), in the prior financial year, the
Company intends to explore further high margin licensing opportunities; and
· The Board is pleased to see buoyant demand across its range of
products and solutions but recognises the need to focus aggressively on the
most strategically important and financially rewarding of markets. As it does
this the Company continues its advanced stage discussions to procure strategic
investment but is also prudently assessing a range of other financing options.
Overall, the Company anticipates a very busy year and looks forward to
updating shareholders of further progress.
Publication of Final Results
The Company expects to announce its final results for the year ended 31 May
2024 in September 2024 and will advise the market of the precise date in due
course.
Commenting on the trading update, Ian Foley, CEO of Equipmake said: "We are
very pleased to have delivered a substantial increase in revenue in the year,
a 60% increase on the previous year, highlighting both the increased awareness
of, and demands for, our pioneering electrification technologies. Whilst we
have clearly incurred more cost than expected in scaling volume in bus
repowering, which is of course disappointing, we have collated significant
learnings from this and are focussed on optimising operations, bringing in
cost reductions and other efficiencies as we scale further. We have
strengthened the senior team to help achieve this.
"It is testament to the quality of our expertise and attractiveness of our
offerings that the Company has been able to initiate and progress multiple
engagements with very large global OEMs and Tier 1 suppliers, which is very
much our focus, and we look forward to seeing the more material fruits from
these relationships in the future. I look forward to another year of growth
and to updating the market in due course."
Adjusted EBITDA(1) is defined as earnings before interest, taxation,
depreciation and amortisation, and before any exceptional costs or share based
payments charges, if applicable.
**ENDS**
For further information, please contact:
Equipmake Via St Brides Partners
Ian Foley, CEO
Tony Ratcliffe, CFO
Panmure Liberum (Corporate Adviser & Joint Broker) Tel: +44 (0) 20 7886 2500
James Sinclair-Ford / Joseph Tan
Mark Murphy / Hugh Rich / Sam Elder
VSA Capital Limited (Joint Broker)
Simon Barton / Alex Cabral Tel: +44 (0) 20 3005 5000
St Brides Partners (Financial PR Adviser) Tel: +44 (0) 20 7236 1177
equipmake@stbridespartners.co.uk
Paul Dulieu / Will Turner
About Equipmake
Equipmake is a UK-based industrial technology company specialising in the
engineering, development and production of electrification products to meet
the needs of the automotive and other sectors in support of the transition
from fossil-fuelled to zero-emission powertrains.
Equipmake is a leader in high performance technologically advanced electric
motors, inverters and complete zero-emission electric drivetrains and power
electronic systems. Equipmake has developed a vertically integrated solution
providing fully bespoke solutions to its customers. The Company is focussed on
accelerating traction with OEM and Tier 1 suppliers in relation to higher
margin component and drivetrain supply under long-term growth contracts.
Key differentiators of the Company offerings are its advanced technology and
performance, reliability and adherence to ASIL-D(2) functional safety.
Equipmake's advanced motor and inverter technology, featuring ASIL-D
compliance, are designed to customers' highest Functional Safety standards.
With decades of experience in electric drivetrain integration and a dedicated
prototype vehicle testing facility, Equipmake can significantly accelerate
product development for customers.
(2) Automotive Safety Integrity Level ("ASIL") is a risk classification scheme
defined by the ISO 26262 - Functional Safety for Road Vehicles standard and is
a critical requirement for road vehicles. Of the four ASILs identified by the
standard, ASIL-D dictates the highest integrity requirements on the product,
which require exceptional rigour in their development.
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