Wellington Drive Technologies third quarter results
Wellington Drive Technologies announces third quarter results. Focus turns to growth as operating improvements continue.
Auckland, New Zealand – Wellington Drive Technologies (NZX:WDT), a world leader in energy efficient commercial refrigeration solutions today announced financial results for the third quarter ended 30 September 2013.
Greg Allen, Wellington’s Chief Executive commented “Wellington continued to deliver on its five main priorities for 2013 with tight control of operating costs, further expansion in gross margin, the launching of its new Fanpack product and the signing of its strategic partner agreement. While Wellington’s third quarter was seasonally weak, we are anticipating a lift in sales in Q4, and are encouraged by the early indications of customer demand in 2014.”
Third Quarter 2013 Highlights
· Commercial Refrigeration revenue for Q3 was $4.7m, $0.9m less than the $5.7m recorded in Q3 2012 (excluding Ventilation revenues). Q3 is the company’s seasonally weakest quarter and that seasonality was worse than 2012;
· Gross Margin increased to 23%, a further improvement over the 17% in the first half of 2013 and the 2012 margin of 14%. This result was delivered through higher margin product mix and further flow-through of existing supplier cost reductions;
· Net Profit after Tax (“NPAT”) for the period was a loss of $970,000;
· Earnings before Interest, Tax, Depreciation and Amortisation (“EBITDA”) was a loss for the period was $841,000;
· Earnings before Interest and Tax (“EBIT”) for the period was a loss of $969,000;
· Progress in the five main priorities for 2013, which have resulted in;
o Announcement of strategic partnership with East West Manufacturing;
o Launch of new FanPack product and a low power EC Motor variant;
o Investing in Asia growth with a new Sales Director based in Shanghai, China.
Third Quarter and Year to Date summary
CONSOLIDATED (NZ$000’s) Three months ended Nine months ended
(Unaudited) 30 September 30 September
2013 2012 2013 2012
(i) The table above shows the calculation of Commercial Refrigeration Revenue, EBIT and EBITDA amounts, which are considered to be non-GAAP financial information. All amounts have been calculated consistently and extracted from Wellington’s unaudited management accounts. The non-GAAP disclosures reflect underlying operating performance and are understood by Wellington’s investors.
2013 Guidance update
The company’s Q4 2013 outlook shows demand returning from key Latin American and European customers. Wellington is reaffirming guidance for 2013 as revenue in the $30-$33m range, albeit at the lower end of this range. Profit expectations are consistent with previous guidance of 18%-20% gross margin and an EBITDA loss of below $3m. Full year NPAT is expected to be a loss at or below $3.5m
2014 – Transition to growth:
2014 will be the year Wellington exits its turnaround phase and transitions to its new growth strategy. The financial objective for 2014 is for the company to achieve positive EBITDA, an objective that will be balanced with increasing the investment needed to deliver long-term growth. The company is focused on three key areas as it enters 2014:
· Supply chain transition: Fully implementing its dual source strategy, with its new strategic partner, East West, being qualified and fully on-line as a supplier by the end of Q3 2014;
· New products: Launching the first of its next generation EC motor and Smart Controller products in second half of 2014, with substantial revenues flowing in 2015; and
· Investment in growth: As the operating performance continues to improve the company’s strategy will shift towards accelerating growth. To support this shift, investments will be contemplated in engineering, customer facing and business development skills to strengthen new product offerings, customer acquisition and expansion into new markets.
We expect to give more detailed financial guidance on 2014 as part of our next quarterly results update.