Key highlights from paragon’s H118 results include:
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The order book stands at c €2bn on a probability-weighted basis, deliverable over the next five years. A 100% weighting brings this backlog value to €1.37bn, of which Voltabox accounts for 54%.
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Reported H118 revenues of €78.59m (H117 €55.29m), supported by sequential growth and a Q218 contribution of €44.35m (Q217 €29.4m; Q118 €34.24m).
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Reported H118 EBITDA of €11.04m (H117 €8.00m), reflecting the sequential uplift of Q218 on Q118, with Q218 EBITDA of €6.24m (Q217 €4.64m; Q118 €4.80m).
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Reported H118 EBIT of €4.8m (H117 €3.71m) represented a 29.4% increase and reflects the improvement at Electromobility and Mechanics, and a positive contribution in Eliminations (??); however, the contribution from Electronics fell by 44.7%.
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Reported H118 EPS of €0.16 (H117 €0.35).
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Net cash at the period end was €34.1m (H117 €80.5m).
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FY18 outlook increased from around €175m revenue to between €180–185m with EBIT margin around 8%, down from around 9% previously.
Exhibit 1: paragon Q118, Q218 and H118 results summary
Year to December (€m) |
Q117 |
Q217 |
H117 |
Q118 |
Q218 |
H118 |
% H1 change |
Divisional revenue |
|
|
|
|
|
|
|
Electronics (of which) |
22.51 |
22.66 |
45.17 |
21.65 |
23.37 |
45.02 |
(0.3) |
- Sensors |
8.52 |
7.95 |
16.48 |
8.67 |
8.97 |
17.63 |
7.0 |
- Cockpit |
8.36 |
8.89 |
17.25 |
7.65 |
10.53 |
18.18 |
5.4 |
- Acoustics |
5.63 |
5.82 |
11.44 |
5.34 |
3.87 |
9.21 |
(19.5) |
Electromobility (of which) |
2.56 |
5.47 |
8.03 |
5.06 |
13.07 |
18.13 |
125.8 |
- Voltabox AG |
0.93 |
5.14 |
6.08 |
4.64 |
10.15 |
14.79 |
143.3 |
- Voltabox of Texas Inc |
1.63 |
0.32 |
1.95 |
0.42 |
2.92 |
3.34 |
71.1 |
Mechanics (Body Kinematics) |
0.80 |
1.30 |
2.10 |
7.53 |
7.91 |
15.44 |
637.0 |
Group revenue |
25.87 |
29.42 |
55.29 |
34.24 |
44.35 |
78.59 |
42.1 |
Reported EBITDA |
3.36 |
4.64 |
8.00 |
4.80 |
6.24 |
11.04 |
38.0 |
EBITDA margin |
13.0% |
15.8% |
14.5% |
14.0% |
14.1% |
14.0% |
(2.9) |
Divisional EBIT |
|
|
|
|
|
|
|
Electronics |
2.60 |
4.74 |
7.34 |
2.10 |
1.96 |
4.06 |
(44.7) |
Electromobility |
(0.10) |
(1.59) |
(1.69) |
(0.80) |
0.92 |
0.12 |
(106.8) |
Mechanics |
(0.20) |
(0.89) |
(1.09) |
1.00 |
(1.04) |
(0.04) |
(96.8) |
Eliminations |
(0.95) |
0.10 |
(0.85) |
(0.69) |
1.35 |
0.66 |
(176.9) |
Group EBIT |
1.35 |
2.36 |
3.71 |
1.61 |
3.19 |
4.80 |
29.4 |
Group EBIT margin |
5.2% |
8.0% |
6.7% |
4.7% |
7.2% |
6.1% |
(9.0) |
Profit before tax (reported) |
0.59 |
1.61 |
2.20 |
0.16 |
1.78 |
1.94 |
(11.8) |
Net profit (loss) |
0.07 |
1.53 |
1.60 |
(0.25) |
0.97 |
0.72 |
(54.7) |
Reported EPS (€) |
0.01 |
0.34 |
0.35 |
(0.06) |
0.22 |
0.16 |
(54.3) |
Net debt/(cash) |
|
38.14 |
(80.49) |
|
(34.10) |
(34.10) |
(57.6) |
Electronics continued to be the largest segment, accounting for 57% of group external sales in H118. While H118 division revenue fell fractionally by 0.3%, Q2/Q2 growth was 3.1% and sequential growth on Q118 was 7.9%. Growth in Sensors of 7% resulted from the continued increase in the take-rates of current vehicle models with the latest product generation. The 19.5% H1/H1 decline in Acoustics revenues was due to life-cycle effects. Growth of 5.4% in the Cockpit sub-segment reflected seasonal effects. In essence, this division is undergoing a year of transition on products, and the lower revenue leverage generated a lower H118 EBIT contribution of €4.06m, down from €7.34m in H117.
Mechanics accounted for 20% of external sales in H118 and reported H118 revenues of €15.44m (H117 €2.1m) as series production begins on the new generation of freely adjustable rear spoilers that optimise vehicle aerodynamics. The division has continued to incur start-up costs with materials and prototype construction. Although the operation moved into profit in FY17, the ongoing costs have affected profitability. While the division continues to benefit from the inclusion of paragon movasys (formerly HS Genion), which was acquired in November 2017, there has been a negative impact from the cost of the redundant sites (Delbrück and Landsberg am Lechit). Overall, the division reported an EBIT loss of €0.04m and down from the H117 loss of €1.09m.
Exhibit 2: paragon H118 revenue by division
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|
|
|
Electromobility (23% of H118 group sales) comprises Voltabox’s operations in the US and Germany. Voltabox was the subject of a successful IPO in October 2017 and paragon now holds a 60% stake in the operation. Reported H118 revenues of €18.13m (H117 €8.03m) with uplift in revenues provided by growth from both the German and US businesses. This is in contrast to FY17, where the growth was driven by Germany. Sequential revenue growth Q218 over Q118 was 158%, showing the momentum in the business. The positive EBIT trend has also continued, with the business generating H118 EBIT of €0.1m (H117 €1.7m).
The main driver was strong growth of battery modules for intralogistics operations (eg forklift trucks), plus series production for large batteries used in trolleybuses and underground mining vehicles (Komatsu). The strong start to FY18 has boosted management confidence at Voltabox and the positive order situation adds visibility and supports an increase in FY18 guidance. The total order backlog amounts to c €1bn for delivery in the next five years, of which a 100% weighting gives a planning backlog of €740m. H218 profitability is expected to increase very significantly through increased scale production volumes, with Voltapower the main driver.
Voltabox management is also taking portfolio action through its business alliances and M&A. The company has reaffirmed its strategic partnership with Triathlon Batterien (in place since 2014) and announced a premature rearrangement of the agreement to ensure long-term access to the intralogistics market, which continues to grow strongly. This cooperation agreement is reducing FY18 EBIT by c €2m as the financial compensation to Triathlon is amortised over the contract period, with divisional EBIT margin guidance for FY18 now around 7% (10% previously). As for M&A, the acquisitions of Concurrent Design and Navitas were both announced during the first half. Voltabox announced on 4 April 2018 that it had added engineering capability in the US through the acquisition of Concurrent Design based in Austin, Texas. With more than 20 design and software engineering specialists, the purchase has bolstered Voltapower’s R&D capability, extending the ability to develop platform solutions to more than one at a time and potentially further accelerating growth from 2019. The Navitas deal was announced at the end of Q218 and remains subject to US approval. Based in Woodridge, Illinois, the company focuses on solutions based on solid state and lithium-sulphur batteries. Overall, assuming the completion of the Navitas deal in Q3 FY18 Voltabox FY18 revenue guidance increases from €60m to between €65m and €70m, with expected EBIT margin reduced from 10% to 7% on the Triathlon rearrangement.
