“I’m pleased that given the challenging circumstances, we have delivered stable margins, a strong increase in recurring revenues and an improved net profit. All QleanAir’s markets and product categories were negatively impacted by the pandemic during the third quarter. The order intake and sales were lower. However, we saw a recovery in sales during the latter part of the quarter and sales in September 2020 were in line with September 2019”, comments Christina Lindstedt, CEO.
Jul – Sep 2020 in summary
January – September 2020 in summary
Stable margins, better cash-flow and increased net profit
Sales for the quarter amounted to SEKm 104.9 (119.0) with currency-adjusted organic growth of -4.6%. The EBITDA-margin for the quarter was 23.7% (adjusted 22.2). Cash-flow increased to SEKm 22.4 (13.9). Net profit increased to SEKm 9.0 (2.2). Order intake decreased by 39% to SEKm 54.4 (89.5). The order intake does not include contracts shorter than 36 months. For the period January-September 2020, we delivered continued strong organic growth of 15.6%. Our total installed base of units continued to increase and amounted to 9 406 units at the end of the quarter, an increase of 16% compared with the end of the third quarter previous year. Furthermore, net debt decreased, and the equity/assets ratio increased, which strengthened the balance sheet.
Slowdown in APAC and Americas, stable in Europe for the quarter
On the Japanese market, the pandemic impacted our business due to the continued lock-down ever since the beginning of the outbreak. Sales from Cabin Solutions in Japan decreased in the third quarter in relation to the first half year, where the Health Promotion Act contributed to an exceptionally strong start. In the medium term, we continue to see favorable growth potential in Japan, for both Cabin Solutions and Facility Solutions, where we just launched our Facility Solution range of products. Meanwhile, we experienced an increase in new contracts with terms shorter than 36 months (which are excluded from our statistics for incoming orders). Contracts with terms shorter than 36 months are more common for our new solutions within the Facility Solutions. The US market was greatly affected by the Covid-19 pandemic, especially in our segments in the healthcare sector. Our business in the US consists solely of Room Solutions, where each installation has a higher value than for Facility Solutions and Cabin Solutions, and has historically had greater volatility between quarters.
Increased pace of innovation and business development. More product launches for Facility Solutions and more market introductions
In Q3 we experienced a continued positive trend in demand for our FS solutions. We are gaining ground with our new dedicated solution for the Food segment that we launched in Q2. In Q3 we launched FS90, our most powerful air cleaning solution to date for large industrial facilities. The FS90 is an even more efficient installation of air cleaning solutions, especially for customers in our warehouse/logistics and production segments. We also launched another new product, FS30, in Q4. The FS30 is developed for office and healthcare environments with a customized efficient air cleaning solution and delivers HEPA-filtered air at a low noise level. This product provides yet another solution that will enable QleanAir to take an active role in reducing the risk of Covid-19 transmission in the workplace, thereby providing a safer working environment primarily in offices and the healthcare setting.
In Q3 we won a contract for a framework agreement with PostNord. PostNord has been an important customer for many years.
Q3 was also the quarter when we received our first order in Japan for air cleaning solution in the office environment with Facility Solution. We plan to further develop this market by introducing more solutions related to Facility Solutions to more customer segments in Japan.
The pandemic – closed markets impact sales and incoming orders; increased demand for air cleaning solutions in the long term
The pandemic has raised awareness about the importance of clean indoor air quality. We see that this increased awareness will have a positive impact on demand for our solutions in both the medium and long term. In the short term, we experience mixed effects from the pandemic. Closed markets have a negative impact on incoming orders, deliveries and revenue. At the same time, when a high percentage of the workforce is working from home, in some cases customers are postponing investments in the working environment. On the other hand, we have also seen increased demand for air cleaning solutions in the short term from certain segments, such as office and healthcare environments, where the issue of being able to provide a safe working environment has become an even greater priority during the pandemic.
The recurring revenues amounted to SEKm 64.9 (48.3). An increase in the number of installed units in our own balance sheet means an increase in recurring revenue. This trend means an increased revenue stream through monthly rent payments, with fewer contracts sold to financing companies, which explains to some extent the decline in sales compared with the same period the previous year. Our focus on controlling costs and cash flow at an early stage of the pandemic has had a positive impact on margins and earnings. Our business model, with a high proportion of recurring revenue, like our model of working with strategic partners for production and service, makes us resilient in times with challenging market conditions.
We continue to pursue our growth strategy for the medium and long term, with a focus on developing and expanding our new product categories Facility Solutions and Room Solutions, while growing our position with identified customer segments in a global perspective. In the short term, we experience a continued high degree of uncertainty in our markets. In the medium and longer term, I am convinced that there will be an increase in the need for clean, safe, and controlled indoor environments with good air quality. We have an excellent customer base on which to continue to build our business, we have a strong product portfolio, and we will continue to invest in our brand and in our products. I would like to take this opportunity to extend a warm thank you to all of our dedicated and committed employees, our customers and our partners in these turbulent times.
Solna on November 12, 2020
Christina Lindstedt, CEO QleanAir Holding AB
QleanAir invites to telefonconference/audiocast on November 12, 2020 at 10.00. The company’s CEO, Christina Lindstedt, and CFO, Henrik Resmark, will present the third quarter and first nine months 2020 results in English.
Here is the link to follow the presenation online:
Telephone numbers for dial-in:
Dial-in number SE: +46856642703 UK: +443333009268 US: +18335268383