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DGAP-News: Voltabox balance sheet adjusted following extraordinary revaluation - reorganization sets foundation for sustainable growth from 2021 onwards

DGAP-News: Voltabox AG / Key word(s): Annual Results/Forecast
20.08.2020 / 16:46
The issuer is solely responsible for the content of this announcement.

Voltabox balance sheet adjusted following extraordinary revaluation - reorganization sets foundation for sustainable growth from 2021 onwards

- Group revenue decreases to € 56.6 million following revenue postponements and reversed sale of IP rights

- EBIT at € -107.6 million following comprehensive adjustments of assets - EBIT margin adjusted for one-off value adjustments at -15.0 %

- First quarter below target as expected due to impact of COVID-19: Revenue of € 2.8 million with EBITDA margin of -220,6 % - upward trend in second quarter

- Short-time work discontinued Group-wide, recovery effects now tangible - Management Board anticipates further gradual ramp-up in the third quarter following multi-week production standstill in the first half of the year

- Fiscal year 2020: Voltabox project business severely impaired by impact of the COVID-19 pandemic - revenue decline of 20 % to more than 50 % with negative EBITDA anticipated

- Targeted restructuring and efficiency program concluded - course set for continued sustainable development of business in 2021

Delbrück, Germany, August 20, 2020 - Today, Voltabox AG [ISIN DE000A2E4LE9] published its annual report for 2019 as well as its report for the first quarter of the current fiscal year. In light of the ongoing limitations on visibility resulting from the COVID-19 pandemic, the company has provided a revenue outlook in the form of a range. Following adverse revenue performance in 2019 due to unexpected project postponements, the Management Board is using the current fiscal year marked by the COVID-19 pandemic to restructure and set a course for the Group towards the desired development of its market position.

In the past fiscal year, Voltabox was able to carry out a successful refocusing of its business activities. The comprehensive measures involved were triggered by project postponements and an interruption of production due to supplier default. This planning deviation resulted in severely inhibited revenue development in combination with a simultaneous deficit in coverage of fixed costs. A package of cost structure optimization measures introduced in fiscal year 2019 successfully counteracted these effects and yielded a sustainable positive impact on the Group's operational efficiency.

"In regard to the external shocks to our planning due to the project postponements that defined our business in the past year, we signaled from an early stage that our focus was on fiscal year 2020. The COVID-19 pandemic, however, represents an extreme disruption to the entire economy. This has affected our project business to a significant degree," says Jürgen Pampel, CEO of Voltabox AG. "In accordance with this fact, we promptly retracted our forecast for the current year. By carefully addressing the pandemic's impact on our business, the transparent publishing of a worst-case revenue scenario and adjusting our balance sheet, we hope to provide the public and the capital markets with the most accurate picture possible of how the current situation is affecting the operational business of Voltabox. As a matter of course, we are also demonstrating the effectiveness of the measures we have adopted to prepare ourselves for the future."

Along with reducing cost burdens, the company's activities over the past fiscal year have been centered on the action areas of developing product management further and securing market shares. The milestones achieved include, in particular, the value analytical revision of modular components, the continued development of innovative product solutions to series readiness in line with the needs of the market, the expansion of spatial capacities at the U.S. site, the development of further market segments and the acquisition of new customers. The planned reduction in the amount of trade receivables, which had increased during the year, was successfully concluded according to plan by the end of the year. The desired reduction of certain material inventories was also successfully achieved during the reporting year.

Against the backdrop of the revenue postponements and the associated adjustment of the forecast, the management prepared various scenarios for divestments and balance sheet contractions as part of the restructuring measures and repositioning in order to ensure the value-preserving use of inventories of finished and unfinished products, in particular of old-generation cells, in 2019. Although it was confirmed that market-side demand for modules and systems with first generation cells would persist beyond 2019, substantial price reductions are now necessary for high-volume sales as a result of the COVID-19 pandemic among other factors. For this reason, the company has revalued its inventories and recognized a provision for impending losses. Furthermore, worsened business prospects due in part to the current restrictions on economic activity resulting from the pandemic have led to extraordinary write-downs. The Voltabox Group was ultimately unable to fulfill the forecast issued, generating revenue of € 56.6 million, which turned out lower than planned due to the reversal of the sale of IP rights, with an EBIT margin of -190.0 % burdened by extraordinary valuation allowances.

"Voltabox was confronted with a number of challenges in fiscal year 2019 which, as a whole, resulted in a disappointing operating performance in 2019," explains Patrick Zabel, CFO of Voltabox AG. "On the other hand, however, we have responded to these challenges with rigorous and precise countermeasures, including an improved planning methodology, conservative liquidity planning and the renegotiation of supplier agreements. Although it is too early to say whether 2020 will see a return to a profitable growth trajectory due to the known economic uncertainties, we are very optimistic in regard to our medium-term planning. The further development of Voltabox should become apparent as early as next year."

The first quarter of the current fiscal year concluded with substantially lower results than expected in accordance with the severe restrictions of business due to the COVID-19 pandemic. As a consequence of blocked delivery routes and the need to protect the health of its employees, Voltabox reduced activities in major portions of its operating processes to a minimum in mid-March. The impact of the spread of COVID-19 had a significant adverse effect on the project business of Voltabox, with the result that revenue for the first quarter totaled € 2.8 million with an EBITDA of € -6.2 million, which corresponds to a margin of -220.6 %. Voltabox has since returned to two-shift operation, and anticipates slightly increased earnings in the second half of the year despite the substantial restrictions still in effect during the second quarter.

In the statement of comprehensive income for fiscal year 2019, capitalized development costs increased by 158.8 % to € 7.8 million (prior year: € 3.0 million) due to new projects in the area of supplying battery systems for public transport. The cost of materials decreased by 16.6 % to € 35.2 million (prior year: € 42.2 million). The material input ratio (calculated from the ratio of cost of materials to revenue and inventory changes) increased to 78.2 % (prior year: 56.4 %), primarily as a result of increased part prices for pre-series systems. This results in a gross profit for fiscal year 2019 of € 19.4 million (prior year: € 37.8 million), which constitutes a gross profit margin of 34.3 % (prior year: 56.5 %).

Personnel expenses rose by 16.8 % to € 15.9 million (prior year: € 13.6 million), mainly due to new hires at the beginning of the fiscal year. As a result of the decrease in revenue, the personnel expense ratio increased to 28.1 % (prior year: 20.4 %). Earnings are substantially burdened by impairments of € 86.9million (prior year: € 0.0 million). Earnings before interest, taxes, depreciation and amortization (EBITDA) thus decreased to € -14.4 million (prior year: € 9.6 million), which corresponds to an EBITDA margin of -25.4 % (prior year: 14.3 %).

After increased planned depreciation and amortization of property, plant and equipment and intangible assets of € 6.3 million (prior year: € 3.6 million), earnings before interest and taxes (EBIT) decreased to € -107.6 million (prior year: € 5.6 million). Adjusted for the valuation allowances, the provision for impending losses and the sale of IP rights, the EBIT margin is -15.0 %.

Taking into account income taxes of € 5.9 million (prior year: € 2.9 million) due to deferred taxes, the Voltabox Group generated a consolidated net income of € -101.9 million (prior year: € 2.6 million) in the year under review.

The assets of the Voltabox Group decreased to € 89.1 million (December 31, 2018: € 181.5 million) as of the reporting date mainly due to impairments of current and intangible assets. Noncurrent assets decreased to € 31.3 million (December 31, 2018: € 51.9 million). The primary reasons for the decline were the reduced intangible assets of € 10.7 million (December 31, 2018: € 28.0 million). Current assets decreased to € 57.9 million (December 31, 2018: € 129.7 million). This is mainly due to the decline in cash and cash equivalents and the reduction in receivables. At the end of the fiscal year, cash and cash equivalents amounted to € 5.0 million (December 31, 2018: € 28.2 million). Inventories were reduced to € 15.7 million (December 31, 2018: € 27.2 million). Trade receivables decreased by € 24.9 million to € 31.1 million (December 31, 2018: € 56.0 million) as a result of scheduled repayment by a customer.

Voltabox Group's equity decreased to € 51.8 million (December 31, 2018: € 154.5 million), which resulted from the consolidated net income of the 2019 reporting year. In this context, the equity ratio decreased to 58.1 % (December 31, 2017: 85.1 %).

Cash flow from operating activities improved in the period under review to € -10.9 million (prior year: € -54.8 million). The main reason a the significant reduction in trade receivables due to the scheduled repayment following temporarily extended payment terms for an important customer in intralogistics in the third and fourth quarters of 2018 and the cash-effective valuation allowance of inventories. Cash flow from investment activity improved to € -8.5 million (prior year: € -19.1 million). Investments in property, plant and equipment totaling € 6.3 million (prior year: € 1.6 million) and intangible assets totaling € 9.1 million (prior year: € 11.9 million) make up the capital expenditure of € 15.4 million (prior year: € 13.6 million).

Due to the COVID-19 pandemic the business prospects for the Voltabox Group for the current year have deteriorated significantly. With expected Group revenues of € 25 million to € 45 million and a Group EBITDA margin of -6 % at most, the company views the current fiscal year as extraordinary. Thus, the year 2020 is seen as transition for the return to sustainable growth with corresponding profitability in the years to come. The Management Board expects a slightly negative free cash flow in the current year due to the COVID-19 pandemic. Together with intralogistics, particular focus will be placed on the existing local public transportation market segment (trolleybuses and the conversion of diesel buses). In addition, the new market segments of mobile and stationary energy storage will contribute to revenue for the first time. Voltabox has specifically prioritized diversifying its customer base and thus its revenue distribution during the past fiscal year.

The company's complete, audited consolidated financial statements as well as the interim report as of March 31, 2020 are available for download from https://www.ir.voltabox.ag.


About Voltabox AG

Voltabox AG (ISIN DE000A2E4LE9), which is listed on the regulated market (Prime Standard) of the Frankfurt Stock Exchange, is a system provider for e-mobility in industrial applications as well as in select mass markets. Its core business lies in intrinsically safe, highly developed high-performance lithium-ion battery systems that are modular and in serial production. The battery systems are used for applications including commercial vehicles, such as buses for public transportation, forklifts, automated guided vehicles and mining vehicles. The company also develops and produces high-quality lithium-ion battery systems for select mass-market applications such as pedelecs and e-bikes as well as starter batteries for high-performance motorcycles.

Voltabox has production sites at its headquarters in Delbrück, Germany, in Austin, Texas, USA, and in Kunshan, China.

Additional information about Voltabox can be found at www.voltabox.ag/en.

 

Contact

Voltabox AG

Stefan Westemeyer
Artegastrasse 1
33129 Delbrück, Germany
Tel.: +49 (0) 52 50 - 99 30-685
Fax: +49 (0) 52 50 - 99 30-901
Email: investor@voltabox.ag



20.08.2020 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases.
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