FlexQubes report for the first quarter 2023
FIRST QUARTER 2023
- Order intake decreased by 25.6 percent to 35.7 MSEK (48.0). Adjusted for foreign exchange rate effects between the comparison periods, order intake decreased by 34.6 percent.
- Net sales decreased by 32.5 percent to 29.4 MSEK (43.5). Adjusted for foreign exchange rate effects between the comparison periods, net sales decreased by 37.0 percent.
- Operating profit before depreciation (EBITDA) amounted to -11.9 MSEK (-4.8) and operating profit before financial items (EBIT) amounted to -13.3 MSEK (-6.0).
- Profit before tax amounted to -13.7 MSEK (-6.1).
- Earnings per share amounted to -1.7 SEK (-0.7).
- Cash flow amounted to 1.0 MSEK (0.5), of which -23.2 MSEK (-4.8) from operating activities, -4.0 MSEK (-1.8) from investment activities and 28.2 MSEK (7.0) from financing activities.
- Cash and cash equivalents amounted to 31.4 MSEK (35.5) at the end of the period.
- During the quarter, we have submitted another patent to protect our unique AMR system, the FlexQube Navigator AMR. This non-load-bearing robot has a standardized connection for navigating motorized carriers of different sizes and functions based on the mechanical FlexQube concept. So far, a total of four patent families have been submitted for the AMR system to provide as broad protection as possible. The target is to create an ecosystem of carriers that solve customers' material handling challenges with a single AMR robot.
- The company secures a new credit facility of SEK 45 million through our new bank Danske Bank and expanded cooperation with ALMI. The funding will primarily be used to strengthen the rollout of FlexQube Navigator AMR.
- FlexQube's future CEO Mårten Frostne sign up for 110,000 warrants at a value of approximately SEK 1.5 million. Mårten has a strong commitment to the company, which contributes to a common incentive for long-term shareholder value.
- The company receives orders worth approximately SEK 6.6 million in the US, for mechanical carts to customers in the pharmaceutical and manufacturing industry.
- European customer orders AGV robots worth approximately SEK 3.7 million, largest order for AGV systems in Europe to date.
EVENTS AFTER THE END OF QUARTER
- The company has participated in one of the largest logistics trade shows in Germany, LogiMAT. This was also the first time we showed FlexQube Navigator AMR at a trade show in Europe, which generated great interest by our visitors.
- FlexQube's Annual Report (Swedish) for 2022 is published and available on the website. English version will be available during month of May.
- FlexQube's IP advisor has announced that the first patent in the series for the AMR robot is likely to be granted during the second quarter or early third quarter of 2023.
Link to the report for the first quarter 2023: https://www.flexqubegroup.com/secure-file.php?file=31f4c903e93cff049fd25e74328a507c.pdf
The entire quarterly report is also attached to this press release.
STRONG MARGINS, SHORT TERM A MORE CAUTIOUS MARKET BUT RECORD HIGH PROJECT PIPELINE
The first quarter has been an intense period and we have reached a number of milestones for our AGV and AMR concept. We have completed the largest installation of our AGV systems to date at one of our largest customers in the United States. Our first pilot installation of FlexQube Navigator AMR was successfully completed with two robots at one of the world's largest car manufacturers and towards the end of the quarter we received our largest order for AGV robots in Europe to date! It is no understatement that our technology and sales organization have worked almost around the clock to meet our customers’ demand during this period. We are proud of the progress we have made so far and look forward to continuing to deliver innovative and efficient automation solutions for our customers around the world. Our focus is now on scaling up our production and delivery capacity to meet the increasing demand for our robot products and services. We see a bright future for the AGV and AMR market and our patented technologies will play an important role in driving the logistics and material handling of the future forward. It should be mentioned that for FlexQube Navigator AMR we have applied for several patents, and we expect a response to the first ones within the next few weeks. According to our advisors, it looks very positive and we will then be the first company to receive a patent for a non-load-bearing robot. This is an important step towards our goal of creating an industry standard.
The first quarter was characterized by somewhat slower customer processes, which meant that order intake was weaker than last year. Although volumes are down in the short term, we are increasing quote volumes, and the project portfolio is very strong, which will lead to a return of growth, especially in the second half of this year. Turbulence in the market, with interest rate and inflation problems, has impacted customer processes during the fourth quarter of last year and the first quarter of this year. Since we usually have a lag of four to six months from various market incidents, we saw a similar effect in the third quarter of 2020 after Covid, I believe that the outlook will be more favorable from here on out this year as inflation is now successfully managed by our central banks and the market itself. Another reason is our increased focus on AGV and AMR robots, where sales processes are longer and thus have a short-term effect on order intake.
Our customer activity has been very high, and quotation volumes have steadily increased during the quarter, where we made 15% more quotes in the quarter than in the first quarter of 2022. Mexico has continued to be one of our strongest markets during the quarter, and we have invested in increased resources for sales, management, and administration.
North America's largest material handling trade show, ProMAT, took place in Chicago last week of the quarter. This year, the trade show attracted a record number of visitors, and we gained a large number of new customer contacts and received significant interest from competitors and investors. Our focus on creating a robot system where we build on customized cart solutions is now up to over 6,000 different solutions since the start which appeals to many as it open up many different opportunities, such as building an ecosystem for customers with a standardized robot like our FlexQube Navigator AMR.
The development of our historically strongest market, the United States, has been more cautious during the winter months. A number of our key customers have temporarily chosen to reduce their investments in new equipment, which affects order intake. The volume growth of new customers has not been able to compensate for key customers. To further focus on the US and regain a strong order intake, we have decided to establish Mexico as a single business unit with its own regional manager. The factory establishments in Mexico are growing rapidly. The country is what I like to call the "new China," without the downsides that China has. Among other things, Tesla is establishing a new factory in the country, and we will definitely be able to compete for new orders. Mexico was our largest market during the quarter, which is incredibly positive of course. But the US will once again be the single largest market at the end of the year, while we work to ensure that Mexico continues its trend. The sales organization in the US is also changing with a new sales manager from the second quarter of this year, several new regional sales resources, and additional resources in product management.
The inflow of new projects has been strong throughout the first quarter and into the second quarter so far. The conversion takes longer than before, but the overall quotation volumes have always been an accurate indicator for order intake going forward, although it can fluctuate in the short term when investment decisions require longer lead time at customer.
In the second quarter, we have a record order book for our AGV system. The updating of our control computer and challenges in the supply chain have disrupted our deliveries during the winter months, but from the second quarter, we will be back on track. Sales have been affected by approximately SEK 5 million from postponed deliveries.
SALES & PROFIT
Sales in the first quarter amounted to SEK 29.4 million compared to SEK 43.5 million in 2022, which means a decrease of 32.5 %, primarily driven by a slightly lower order intake in the fourth quarter and previous mentioned delivery problems. Order intake decreased by 32.5%, primarily driven by the cautious market for new investments. Although order intake and sales can vary between quarters, I can state that we have a strong belief in our products, the automation trend and the existing high quotation volumes.
The work to strengthen our gross margin is progressing very successfully. During the first quarter we reached a record high gross margin, about 1.5 percentage points better than the end of 2022 and a full 13.1 percentage points better than in 2021. This is the result of cross-border cooperation throughout the company where we continuously work to optimize purchase prices and quotations towards customers. In addition, we see continuous efficiency improvements from our own assembly, increased sales of unassembled products and a favorable product mix with a higher proportion of robot sales. We are hopeful of maintaining or further strengthening our gross margin in 2023.
As mentioned earlier, we have started a new collaboration with Danske Bank and our implementation with new banking products has turned out well in the first quarter. The new collaboration gives us access to a credit facility of SEK 40 million and additional long-term loans of SEK 5 million from ALMI. The overdraft facility is an important and cost-effective tool for balancing cash flow between periods and gives us continued scope to invest in inventory and product development, primarily for our AMR system.
The inventory value continues to increase slightly during the first quarter, but our forecast is that this will decrease in the coming quarters, with the outflow of our backordered AGVs, thereby strengthening cash flow. Cash flow is a highly prioritized activity that the entire organization continues to work tirelessly on. It is very pleasing to see our average customer credit days go down, largely due to more projects where we work with partial prepayment that is more successful to negotiate in AGV and AMR projects.
We continue to invest in the organization according to plan in order to handle larger volumes and continue to support the roll-out of the AGV and AMR concepts which will increase costs compared to the same period last year. Costs for marketing and travel have increased by approximately SEK 1.5 million compared with the first quarter last year, driven by the increased activity in our sales force. Together with the lower sales, despite the gross margin improvement, this results in a decline in earnings compared with the previous year. The first quarter is normally one of our weakest and we continue to focus on cash flow optimizing measures and earnings improvements. But above all gain market share for our AGV and AMR systems, which will require faith in continued investments for the future.
FLEXQUBE’S ROBOTIC CONCEPT
During the quarter, we won our largest order to date in Europe for AGV systems when a customer in Slovakia ordered 7 eQart® Line robots. Most of the volume in 2022 has been in North America and Mexico, so it is very satisfying that we now also win larger system orders in Europe, thereby increasing our global footprint of robots.
Our first installation of our autonomous robot FlexQube Navigator AMR has been conducted at a major car manufacturer in the United States. For a week, a couple of our robot technicians were on site at the customer for start-up and at the time of writing, the customer is running pilot tests on the system. The installation has turned out well, which gives increased confidence, useful experiences ahead of the autumn launch and new business opportunities for the next step with the customer.
The robot uses a market-leading navigation software from BlueBotics, which facilitates and speeds up implementation at the customer's premises. Our strategy is to continue our modular concept also regarding software and the customer will be able to choose the software that best fits in their current infrastructure. Many providers currently spend hundreds of millions in development costs for navigation software and it is important for us not to lock ourselves into just one alternative. Our main focus is instead to develop the physical product that creates value for the customer by moving materials in a safe and efficient way and, above all, is presented ergonomically optimally for an operator who refines the material into a final product.
We see that a gradual change is now taking place in the market where interest in our modular cart and robot system is increasing. The internal logistics robotics industry will continue to undergo consolidation in the coming years.
This will be my last CEO letter as I will hand over to our newly recruited CEO Mårten Frostne in June. Mårten and I have had plenty of opportunities to discuss future opportunities in recent months and I am even more strengthened in my belief that Mårten is the right person to lead the company forward. After our handover I’m looking forward to supporting FlexQube with sales- and business development tasks in my new role at the company. FlexQube is still a relatively small and young company, but I am very proud of everything the organization has accomplished which culminated in our record year 2022.
In this short amount of time, we have managed to establish ourselves as a reliable and innovative partner in automation solutions for material handling. We have created a strong team of dedicated employees and built an impressive customer base worldwide. We have also managed to introduce several groundbreaking products to the market, including our entirely unique FlexQube AGV and AMR concept that has already and will revolutionize material handling in many companies around the world. We as a company and the market as a whole are only at the beginning of the automation journey for material handling. I see good opportunities that we will be able to take a relevant market share, with the long-term ambition and potential to set a new industry standard.
Under Mårten's leadership, I am convinced that FlexQube will continue to develop and grow as a company. With his experience and leadership, we will be able to continue to deliver high-quality products and services to our customers while striving to win the position as the leading player in automation solutions for material handling.
I would like to take this opportunity to thank all our employees, customers and partners for their hard work and support during my time as CEO. It has been a fantastic journey that is difficult to put into words, and I am convinced that we have a great future ahead of us.
CEO FlexQube AB (publ)
FlexQube is a technology company headquartered in Gothenburg, Sweden with subsidiaries in USA, Mexico, Germany and England. FlexQube offers solutions for cart-based material handling using a patented modular concept. FlexQube develops and designs customized solutions for both robotic and mechanical cart logistics. Through the own developed and unique automation concept FlexQube can offer robust and self-driving robotic carts. FlexQube has more than 1000 customers in 37 countries with primary markets being North America and Europe.
FlexQube’s customers can be found within the manufacturing industry, distribution- and warehousing. We represent some of the most successful companies in the world with a significant share being represented on the Fortune 500 list. These companies exist within automotive, electric vehicle manufacturing, online retail, heavy-duty trucks, industrial automation and retail logistics.
For more information, contact:
CEO, Anders Fogelberg
+46 702 86 06 74
CFO, Mikael Lindbäck
+46 761 04 10 28
The share (FLEXQ) is traded on Nasdaq First North. FNCA Sweden AB, telephone +46 8-528 00 399, is the Company's Certified Adviser. Read more at www.flexqube.com
This information is insider information that FlexQube AB (publ) is obliged to disclose in accordance with EU Market Abuse Regulation. The information was provided by the above contact persons for publication on May 10, 2023, at. 08:00 CET.