Sdiptech AB (publ) publishes Year-End Report 2022
10 February 2023, 08:00
Sdiptech AB (publ) publishes Year-End Report 2022
The report is available on the company's website: www.sdiptech.se
STRONG DEVELOPMENT ACCORDING TO PLAN AND GOOD OUTLOOK
FOURTH QUARTER 2022
Net sales increased by 36% to SEK 1,017.5 million (749.1). In total for the Group, organic sales growth was 2.1 %, excluding currency effects. Excluding the Group’s electric car charger unit, organic growth was 9.6 %.
Operating profit EBITA* increased by 28% to SEK 195.6 million (153.2), corresponding to an EBITA* margin of 19.2% (20.5). Organic EBITA* growth for the Group was -14.3%, excluding currency effects. Excluding the Group’s electric car charger unit, organic growth was 0.0 %.
Operating profit, EBIT, increased by 107% and amounted to SEK 171.3 million (82.7). Changes in contingent conside-rations have contributed a net of SEK 0.5 million (-39.8).
Profit after tax for the Group increased by 128% and amounted to SEK 107.0 million (47.0) during the period, of which SEK 106.8 million (46.7) was attributable to the Parent Company’s shareholders.
Cash flow from operating activities amounted to SEK 201.4 million (138.9). corresp. to a cash conversion of 99% (92).
Earnings per ordinary share (average number), less minority interests and dividends on preference shares, amounted to SEK 2.81 (1.22). After dilution, earnings per ordinary share amounted to SEK 2.80 (1.21).
During the period, acquisitions of all assets in Industrial Metal Products Inc (IMP) and of all shares in Patol Ltd and Linesense Fire Detection Ltd, which became the Group's 12th business unit in the UK, were completed. In addition, all shares in Mecno Service were acquired, which constitutes the Group's second business unit in Italy.
JANUARY – DECEMBER 2022
Net sales increased by 29% to SEK 3,505.2 million (2,718.9). In total for the Group, organic sales growth was -0.4%, excluding currency effects.
Operating profit EBITA* increased by 32% to SEK 671.1 million (509.3), corresponding to an EBITA* margin of 19.1% (18.7). Organic EBITA* growth for the Group was -10.1%, excluding currency effects.
Operating profit, EBIT, increased by 76% and amounted to SEK 641.2 million (364.4). Changes in contingent conside-rations have contributed a net of SEK 61.6 million (-43.0).
Profit after tax for the Group increased by 73% and amounted to SEK 428.1 million (246.9) during the period, of which SEK 427.1 million (245.9) was attributable to the Parent Company’s shareholders.
Cash flow from operating activities amounted to SEK 564.6 million (385.3), corresp. to a cash conversion of 80% (71).
Earnings per ordinary share (average number), less minority interests and dividends on preference shares, amounted to SEK 11.53 (6.62). After dilution, earnings per ordinary share amounted to SEK 11.48 Kr (6.55).
During the period January to December acquisitions, in addition to what is mentioned for the quarter, were made of Agrosistemi Srl. Temperature Electronics Ltd and TEL UK Ltd. Resource Data Management Ltd. e-l-m Kragelund A/S. The acquisitions include the Group's first business units in Italy and Denmark.
In March, management subscribed for 216,100 newly issued class B Sdiptech shares, which constituted the exercise of the long-term incentive program with warrants of series 2018/2022. The issue entails that the company has received SEK 14.5 million in equity.
Based on the authorisation granted by the annual general meeting, Sdiptech AB completed a directed share issue of 2.2 million B-shares and raises proceeds of SEK 506 million. After the Directed Share Issue, the total number of B-shares in Sdiptech have increased by 35 801 348.
The Board of Directors proposes that the Annual General Meeting resolves on a dividend to the preference shareholders in accordance with the articles of association. The Board of Directors further proposes, in line with the dividend policy, that no dividend be paid on ordinary shares of Class A or Class B.
COMMENTS BY THE CEO
We can proudly sum up another positive year for Sdiptech. Strong cash flow, stable demand and a margin increase for the fifth year in a row. According to plan and as previously communicated, the unit for electric car chargers' sales were lower in the last two quarters of the year, but we are optimistic about the new year.
THE FULL YEAR
We experienced continued good demand from our customers, which resulted in net sales during the year increasing by 29 percent, of which -0.4 percent organically. EBITA* rose 32 percent, of which -10.0 organically. The weak organic development is mainly driven by the previously announced investment carried out in one of our largest business units, which had a negative impact on earnings over the past six months. Excluding the otherwise highly profitable unit for EV chargers, the Group showed positive organic sales growth of +6.2 percent during the period that was affected negatively, i.e. the last two quarters, and an organic EBITA* growth of +4.3 percent, excl. currency effects.
Our margin strengthening continues for the fifth year in a row and the EBITA* margin was 19.1 percent (18.7). New acquisitions contributed to the increased profitability and we remain confident that the Group's profitability will continue to grow and establish around 20 percent in EBITA* margin.
This year's profit after tax increased by 73 percent and it is satisfying to deliver a strong earnings per share for the year of SEK 11.48 (6.55).
Our financial net debt to EBITDA ratio was 1.79, which is well within our financial target of 2.5 and gives us continued head room for acquisitions. Total net debt, i.e. including provisions for future payments of earn-outs, amounted to 3.55 in relation to EBITDA. Notably, these earn-outs assume increased profits from today's levels. This is a central part of our financing model as it means that if profits do not grow as expected, the debt decreases. For example, if profits in the future were to remain at the 2022 level, the booked liability for earn-outs would decrease by 40 percent.
The market situation remained positive for most of our business units during the last quarter of the year, resulting in an organic sales growth of 2.1 percent, despite a negative development in the Group's EV charger unit. Excluding this unit, organic sales growth in the quarter was 9.6 percent.
Revenues in our business unit for EV chargers decreased as expected also in the fourth quarter. The reason was, as previously communicated, a delay in the production of the new technology platform. At the same time as the launch of this new important technology, we moved manufacturing from China to the UK. The new production has now been fine-tuned and the volumes are scaled up according to plan to reach adequate capacity during the first quarter. Demand and the order book are good, and we are optimistic about the new year.
The cash flow from operating activities during the quarter was strong and amounted to SEK 201.4 million (139.1), corresponding to a cash conversion of 99 percent (92). As the availability of critical components and materials improved during the quarter, we have consequently reduced the levels in our safety stocks.
2022 has been a successful acquisition year and we have had the pleasure of welcoming seven new companies to the Group, with a total EBITA* profit of approximately SEK 161 million on an annual basis. We have thus exceeded our acquisition target of SEK 120–150 million. At the same time, we have entered three new markets: Italy, Denmark, and the United States.
All acquisitions for the year all contribute to our position in attractive product and customer segments. The new companies complement our existing operations and Sdiptech increasingly acts as a cohesive group in the infrastructure sector.
As the pace of acquisitions in 2022 was higher than our financial targets, and to maintain continued flexibility in the acquisition work, we carried out a directed share issue in November in our B-share that provided approximately SEK 500 million in growth capital. There was great interest from both new and existing investors to participate in the issue.
According to the UK Government, the number of EV charging points in the UK is expected to have grown about ten times by 2030 from today's levels. With our investments, we have doubled our production capacity, shortened lead times to customers, reduced our climate footprint and, we have eliminated geopolitical risk exposure. We are thus better equipped than ever to grow with continued profitability in line with the continued expansion of charging infrastructure.
We stay disciplined in the review of new acquisitions, and our focus is, as always, high-quality companies with a sustainable offering. It is therefore extra gratifying to be able to state that we have a continued strong pipeline to welcome more high-quality companies in 2023.
We have strong confidence in our decentralized model, consisting of almost 40 business units with leading niche positions and complementary offerings. Our products meet critical needs in an infrastructure that must always work regardless of the economic situation, and we are well equipped for the new year.
In conclusion, I would like to extend a big thank you to all our dedicated employees for your commitment and strong efforts.
President and CEO
For additional information, please contact:
Bengt Lejdström, CFO, +46 702 74 22 00, firstname.lastname@example.org
My Lundberg, Sustainability & IR Manager, +46 703 61 18 10, email@example.com
Sdiptech’s common shares of series B are traded on Nasdaq Stockholm under the short name SDIP B with ISIN code SE0003756758. Sdiptech’s preferred shares are traded under the short name SDIP PREF with ISIN code SE0006758348. Further information is available on the company's website: www.sdiptech.se
Sdiptech is a technology group that acquires and develops market-leading niche operations that contribute to creating more sustainable, efficient and safe societies. Sdiptech has approximately SEK 3,500 million in sales and is based in Stockholm.
The information was provided by the above contact persons for publication 10 February 2023, at 08:00 CET.