"Order intake increased for the second consecutive quarter, up 25 percent in the first quarter compared to the previous quarter. We increased the number of units installed by 15 percent, and the volume of cleaned air by 22 percent compared to the previous year. The installed base drives our recurring revenues, which amounted to 59% of total revenues in the quarter. Both order intake and sales continue to develop positively compared to the previous quarter, which we see as a sign of strength at a time when we continue to experience widespread lockdowns in our markets due to the corona pandemic. I am pleased that, in the first quarter, we increased revenues from our Facility solutions business by 77% compared to last year. This is as a result of the increase in demand we saw in the fourth quarter of 2020 and continue to see going into 2021. We are proud for the opportunity to help create healthy working environments where they are needed the most during the corona pandemic," Christina Lindstedt, CEO, comments.
FACILITY SOLUTIONS INCREASED REVENUES BY 77%. STRONG AND IMPROVED CASH FLOW.
January–March 2021 in summary
• Net sales SEK 110.5 million (144.7)
• Units installed 9,964 (8,638)
• Recurring revenues SEK 64.8m (64.4)
• Order intake SEK 101.9m (146.2)
• EBITDA SEK 26.9m (38.3)
• EBITDA margin 24.3% (26.5%)
• Operating profit (EBIT) SEK 19.9m (31.4)
• Operating margin 18.0% (21.7%)
• Result for the period SEK 20.8m (17.9)
• Earnings per share SEK 1.40 (1.20)
• Cash-flow from operations SEK 24.3m (-4.8)
Significant events during the first quarter
• QleanAir wins a first significant order for new FS 30 in Japan
• QleanAir announces another large FS order from the school sector in Germany
• QleanAir wins a SEK 4.3 million RS order for cleanrooms in Sweden
• QleanAir announces a third major FS order from the school sector in Germany
Significant events after the end of the period
• QleanAir delivered cleaned indoor air equivalent to the volume of 10.22 Stockholm Globe Arenas per hour at the end of the first quarter
• QleanAir wins first significant order within healthcare segment in France
• QleanAir breaks new ground within the office segment in Germany
Order intake increased for the second consecutive quarter – up 25 percent
With the product launches in Facility solutions in 2020, we increased the pace of innovation. We broadened our customer offering and reached out to new customer segments. During the first quarter, we won our second and third major orders from the school sector in Germany. In addition to the three major orders from the German school systems that have been announced to the press, we have also delivered smaller orders to a number of school systems in Germany. Germany is one of our home markets, where we are well established with our product categories Facility solutions and Cabin solutions.
During the quarter, we took a substantial order for Facility solutions in Japan. In Japan, QleanAir already has a strong position within the office segment. With the introduction of Facility solutions in Japan, we are broadening our offering to existing customers, while at the same time increasing our customer base through our broadened offering, which also opens further opportunities within Cabin solutions.
Within Room solutions, our flexible and scalable cleanrooms for the medical device and pharmaceutical sectors, healthcare, and pharmacies, we received a major order for a cleanroom for a production facility from stem cell company Nextcell in Stockholm.
Continued strong activity led to the second consecutive quarter of growth in order intake, compared to the previous quarter. We saw a strong increase in order intake in Europe during the first quarter, up 51% compared to the previous year and the total order intake amounted to SEK 101.9m.
Strong growth in the Facility solutions product category – up 77 percent
Overall, 2020 was a record year for new product launches in the Facility solutions category where, in addition to the FS70 HEPA and FS30 HEPA, we launched a specific product for the Food segment, the FS70 FG, and a specific solution for larger industrial environments, the FS90, our most powerful air cleaner to date. As a result of new product launches, broadened customer segments and the introduction of Facility solutions in Japan, sales for Facility solutions increased by 77 percent and totaled SEK 19.4 million, corresponding to 17.6 percent of net sales for the first quarter. The new products launched in 2020, the FS70 HEPA and FS30 HEPA, have paved the way for creating healthy working environments in new contexts, such as schools, offices and healthcare facilities. We see that our focus on innovation and product launches will continue to generate growth in Facility solutions in 2021 and beyond.
Q1 2020 was exceptionally strong, both in terms of order intake and sales. This was due to the remarkably successful development of Cabin solutions in Japan in the run-up to the new Health Promotion Act, which came into force on April 1, 2020. We continue to believe in a good growth potential for our operations in Japan, both in Cabin solutions and Facility solutions, even if we now see a lower level of orders and sales compared to the same period in 2020.
Increased volume of cleaned air and growth in installed base – up 15 percent
The corona pandemic has raised the awareness of the importance of clean indoor air, which has a positive impact on the demand for our solutions, both in the short and longer term. We predict that this increased awareness will persist, and that it will continue to have a positive impact on our demand both the short and long term, including cleaning of other harmful particles such as mold, pollen, dust, and gases. In the short term, however, the lock-down of our communities continue to have a negative impact on our business, as it is more difficult to reach our customers and conduct our sales activities. During most of the first quarter, all QleanAir's main markets were in lock-down mode.
Our installed base grew by 15 percent, to 9,964 units, and the amount of clean air we supply increased by 22 percent. An increased volume of cleaned air means that our installed base for future revenue generation is growing. Recurring revenues represented 58.7% (44.5%) of total revenues in the first quarter. In absolute terms, recurring income increased to SEK 64.8 (64.4) million. A high proportion of recurring revenues will give us continued good visibility into 2021. An increase in the number of installed units in our own balance sheet means an increase in recurring revenues. It also implies an increase in the proportion of revenues coming from current monthly rentals, as well as a decrease in the proportion of revenues coming from the sale of contracts to finance companies and direct sales to customers, i.e. upfront payments. This explains part of the decline in sales compared to the same period last year when, in particular, the proportion of direct sales to end customers was significantly higher.
High margins generate strong cash flow
We continue to deliver exceptionally good margins in our underlying business. In addition, our model of working with strategic partners for production and service gives us good resilience in times of more difficult market conditions. Profitability increased cash flow from operations and we reduced our debt-to-equity ratio.
New brand expression
I am pleased to present our new logo and branding in this report. This is an example of our new approach to branding and marketing as part of our growth strategy. We will continue to introduce our new expression in our solutions, materials, and activities throughout the year. We want to make our pride in our products and our offering visible, and we will continue to invest in our brand.
In the short term, we see a continued high level of uncertainty in our markets due to the pandemic. We have a high level of activity in the company and expect the increased awareness of the importance of indoor air quality to continue to contribute to an increased demand for air cleaning. Our growth strategy remains firm, with a focus on developing and growing our new product categories Facility solutions and Room solutions, as well as maintaining our strong position in Cabin solutions. In addition to our breakthrough in Facility solutions, with three major orders for school systems in Germany announced, we have also won some major cleanroom orders, in the US in the fourth quarter and in Sweden in the first quarter. We see increased demand for our cleanroom solutions in the Nordic region, and we continue to believe in the growth potential of our cleanroom business in the US. We also see continued good opportunities for an increased penetration level in existing customer segments, as well as further development of more recent customer segments, both in Facility solutions and Room solutions. We will continue to expand our business geographically, and we will continue to invest in innovation and in our brand. I would like to take this opportunity to thank the entire team at QleanAir and our customers and partners for a good start of 2021.
Christina Lindstedt, CEO, QleanAir
Solna, May 12, 2021