Strong performance during the quarter. The increase in the order book for the quarter totaled a record SEK 90 million at the end of June. At that point, the order book amounted to SEK 215 million, double the figure for the same date last year. The EBITA margin reached a good 15,2 %.
Significant events during Q2 2022
- On 7 April, an Agreement was signed on the acquisition of MR Targets. The acquisition was approved by an Extraordinary General Meeting on 27 April. The company has been consolidated in the Group figures with effect from 1 May 2022.
- On 6 May, a number of orders were received within Business Area Training & Simulation, with a total order value of around SEK 39 million. Deliveries will commence during Q2 2022 and continue until summer 2023.
- On 21 May, an order was received from an existing Nordic customer in Business Area Live-Fire Training. The order value is around SEK 33 million, and the systems will be delivered in the fourth quarter of 2022.
- On 30 June, a private placement to Swedish and international institutional investors was implemented. The issue raised SEK 65 million before the deduction of issue expenses. The issue was registered on 4 July 2022. The capital shall be used for the expansion of the business, through acquisitions and investments in the export market.
Financial Overview
| 2022 | 2021 | 2022 | 2021 | Jul 21-Jun 22 | 2021 | |
| MSEK | Apr-June | Apr-June | Jan-June | Jan-June | LTM | Full-year |
| Income | 39.5 | 41.0 | 73.7 | 63.9 | 153.3 | 143.5 |
| EBITA | 6.0 | 9.3 | 10.0 | 12.3 | 13.3 | 15.6 |
| EBITA-margin, % | 15.2 | 22.7 | 13.6 | 19.2 | 8.7 | 10.9 |
| Net profit for the period | 4.0 | 7.6 | 7.1 | 9.9 | 10.6 | 13.4 |
| Earnings per share, SEK | 0.34 | 0.76 | 0.61 | 0.99 | 0.97 | 1.33 |
| Cash flow from operating activities | 27.9 | 20.2 | 13.8 | 22.4 | 9.0 | 17.6 |
| Order received | 90 | 21 | 107 | 37 | 261 | 191 |
| Order book | 215 | 105 | 215 | 105 | 215 | 177 |
APRIL-JUNE 2022
- Operating income for the quarter amounted to SEK 39.5 million (41.0), which is equivalent to a decrease of 4 %.
- Profit, EBITA, for the quarter amounted to SEK 6.0 million (9.3), which is equivalent to a decrease of 35%.
- Cash flow from operating activities amounted to SEK 27.9 million (20.2).
- Order inflows during the period amounted to SEK 90 million (21), with an order book at the end of the period standing at SEK 215 million (105).
JANUARY-JUNE 2022
- Operating income for the first half of the year amounted to SEK 73.7 million (63.9), which is equivalent to an increase of 15 %.
- Profit, EBITA, for the first half of the year amounted to SEK 10.0 million (12.3), which is equivalent to a decrease of 19 %.
- Cash flow from operating activities amounted to SEK 13.8 million (22.4).
- Order inflows during the period totaled SEK 107 million (37), with an order book at the end of the period standing at SEK 215 million (105).
Income for the quarter and half year have been negatively affected by approximately SEK 10 million as deliveries have been shifted by due to a lack of electronic components. The comparative figure’s income was positively affected by an extraordinary commission income of approximately SEK 4 million.
The quarter’s and half-year results have been negatively affected by extraordinary costs of SEK 2.5 million in the form of costs related to acquisitions with SEK 0.7 million and the price increases of electronic components with SEK 1.8 million. The comparison figure’s result was positively affected by an extraordinary commission income of approximately SEK 4 million.
THE CEO’S VIEW, DANIEL HOPSTADIUS
Strong performance during the quarter. The increase in the order book for the quarter totaled a record SEK 90 million at the end of June. At that point, the order book amounted to SEK 215 million, double the figure for the same date last year. The EBITA margin reached a good 15.2 %, despite the fact that both sales and profits were temporarily burdened by increased costs and longer lead times for components but we expect this situation to right itself by the fourth quarter of the year.
Improved margins
The group continues to perform well, and the second quarter has been no exception. It is gratifying to see that our EBITA margin improved for the third quarter in a row, reaching a full 15 %. This is despite the fact that increased costs from the rising prices of raw materials and energy had a depressing effect on our gross margin.
Growing market
We see a clear trend of powerful growth in our market segment. In Sweden, the Swedish Defence Materiel Administration announced that they expect purchasers of materiel to increase sharply over the next few years. By 2030, purchases are expected to have increased by almost SEK 20 billion.
Record high order book
The increased level of activity is clearly seen in our order inflows. During the quarter, we have enjoyed a strong inflow of orders totaling SEK 90 million, and the order book at the end of the quarter amounted to SEK 215 million, more than double the figure for June 2021.
Longer lead times
Sales have been slightly lower during the quarter than in the corresponding period of the preceding year, due to longer lead times for certain components. With normal lead times, we estimate that we would have had additional sales of around SEK 10 million during the period. Deliveries are now planned for the fourth quarter.
Strategic collaborations
We are continuing to develop our collaboration with our partners. We are involved in a range of joint collaborative projects. We very much hope that one or more of these will shortly translate into new orders during the autumn, both nationally and internationally.
R&D
R&D is working flat out. This includes adapting and certifying our ”Omnideck” product for the US market, the development of new drop targets, and the development of a new compact electricity generating plant. Development is continuing, and it is estimated that all products will be completed during the second half of 2022.
Acquisition and new issue
Since 1 May, MR Targets has been part of the W5 Group. This is a welcome addition which both increases our production capacity significantly and improves our availability in respect of service and maintenance. Through MR Target’s strong product portfolio within the target system, we have already succeeded in completing new business and received further assignment to develop new target systems.
To further strengthen our growth potential, we implemented a private placement to Swedish and international institutional investors at the end of June. This raised SEK 65 million before the deduction of issue expenses. The capital raised is to be used to expand our operation, particularly through acquisitions, but also through increased focus on the export markets for our own products.
Our future acquisition strategy is clear, and it is our ambition and objective to complete at least one additional acquisition during 2022.
Strong position
We are well placed to take advantage of increasing defense investment. Solid improvement in profitability. Our order book has set new records, and we are confident that, over the full year, we will reach our EBITA target of 15 %, and will deliver growth in line with our expectations.
In summary, for W5 Solutions, as for many other companies, short-term challenges remain, but, despite this, we are confident that we will achieve our profitability targets with continued strong growth.
Daniel Hopstadius
CEO, W5 Solutions AB
The interim report is available for download at https://w5solutions.com/investor-relations/
