C-Rad AB (FRA:24C) Q3 2024 Earnings Call Highlights: Navigating Challenges with Strong Profit Margins and Global Expansion

C-Rad AB (FRA:24C) demonstrates resilience with a robust EBIT margin and strategic growth in APAC, despite a significant order intake decline in EMEA.

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Oct 24, 2024
Summary
  • Order Intake: SEK100 million, a decline of 40% or 38% in constant currencies from Q3 '23.
  • Revenue: SEK100 million, down 10% from the same quarter last year or 7% in constant currencies.
  • EBIT Margin: 17% for the quarter.
  • Order Backlog: SEK735 million, same level as Q3 last year.
  • Gross Profit: SEK72.7 million, with a margin of 73% compared to 65% last year.
  • Operating Expenses (OpEx): SEK53.7 million, slightly increased from SEK51.7 million last year.
  • EBIT: SEK17.4 million, compared to SEK18.9 million a year ago.
  • Cash Position: SEK118.7 million at quarter end, down from SEK142 million at the beginning of the quarter.
  • EMEA Order Intake: Decreased 77% to SEK23 million.
  • Americas Order Intake: Up 10% to SEK28 million; Revenue declined 10% to SEK23 million.
  • APAC Order Intake: Up 11% to SEK48 million; Revenue increased 43% to SEK45 million.
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Release Date: October 23, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • C-Rad AB (FRA:24C, Financial) maintains a strong financial stability with a solid profitability despite challenges in the EMEA region.
  • The company has a comprehensive interoperability portfolio interfacing with major LINAC, Proton, and CT vendors, enhancing its market position.
  • C-Rad AB is expanding its global presence, particularly in less mature Southeast Asian markets and Latin America, which strengthens its resilience.
  • The APAC region showed strong performance with an 11% increase in order intake and a 43% increase in revenue.
  • C-Rad AB has a healthy EBIT margin of 17% and a strong balance sheet with no long-term debt, allowing for future growth investments.

Negative Points

  • Order intake for the third quarter declined by 40% from the previous year, falling below expectations.
  • Revenue decreased by 10% compared to the same quarter last year, primarily due to lower order intake and backlog conversion timing.
  • The EMEA region experienced a significant 77% decrease in order intake, impacted by macroeconomic slowdown and slower decision-making.
  • Cash flow was negatively affected by increased receivables related to Proton orders, leading to a decrease in cash at quarter end.
  • Concerns were raised about investor confidence following a private presentation that allegedly led to a stock price drop.

Q & A Highlights

Q: How should we think about the gross margin in Q4 given the high levels due to Proton orders in the last two quarters? Do you have any orders left to deliver in the fourth quarter?
A: We do have Proton orders in our backlog, but the timing of their delivery is uncertain. Typically, the underlying gross margin is around 63% to 65%, but it will be boosted in quarters with Proton deliveries. It's too early to say if this will happen in Q4. - Linda Frölén, CFO

Q: When do you expect the acceptance test for the Proton orders to be completed, and can you disclose the amount tied up in working capital?
A: The timing of the final acceptance test varies by customer, making it difficult to predict. The working capital effect this quarter is largely due to Proton orders, but I cannot provide an exact number. - Linda Frölén, CFO

Q: Can you indicate if the tied-up working capital will be freed up in the fourth quarter or next year?
A: I cannot specify regarding the Proton orders, but managing the balance sheet is a primary focus for me as the new CFO. - Linda Frölén, CFO

Q: There was a private presentation at an Investor Day in September, after which the stock price dropped. Was asymmetrical information given to investors?
A: The information shared at the Pareto conference was not new. Any perception of asymmetry is due to how the information was reported, which is beyond our control. - Cecilia de Leeuw, CEO

Q: Do you understand the negative optics of the situation regarding the private presentation and its impact on investor confidence?
A: The information was not new, and the presentation or display by the reporter is their responsibility. - Cecilia de Leeuw, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.