Q3 2022: focus on efficiency and new products amid continued market headwinds
Oslo, Norway, November 3, 2022 /PRNewswire/ —
Third quarter revenue of $10.4 million compared to $13.5 million in the third quarter of 2021
Gross margin of 42% vs. 39% in Q3 2021
Adjusted Q3 EBITDA negative $0.6 million improved from negative $1.4 million in the third quarter of 2021
Revenue over nine months of $41.2 million and adjusted EBITDA of negative $0.2 million
Quarterly OPEX reduced by 35% YoY due to organizational right-sizing and favorable exchange rates
Focus on product development continued with first shipments of next-generation liquid coolers and new SimSports products ready for pre-order in Q4 2022
2022 annual revenue expected within the range of $50–$52 million and an operating loss of $5–$6 million
Asetek announced a turnover of $10.4 million compared to $13.5 million the same period of 2021. Revenue for the first nine months was $41.2 million compared to $61.7 million at the same time last year. The change from the previous year for the two periods compared reflects lower shipments of liquid cooling products due to the still difficult economic climate.
Gross margin was 42% for the third quarter of 2022, compared to 39% in the third quarter of 2021. The improvement in margin reflects a stronger US dollar, a change in product shipment mix and lower costs associated with global shipping and logistics. Gross margin for the first nine months of 2022 was 41% compared to 42% for the same period of 2021.
“As we reduce costs and seek efficiencies in response to the continued difficult business climate, we are also seeing a high level of interest and positive feedback from end users for all of our products. We anticipate recovery demand once the current macro headwinds subside and remain focused on expanding our product program in 2022 and 2023 to capture long-term growth potential as gamers and enthusiasts continue to grow. ‘to demand new and improved gear and experiences in traditional games and simulation racing,’ said André Sloth Eriksen, CEO of Asetek.
The operating loss was $1.7 million and Adjusted EBITDA was negative $0.6 million in the third quarter of 2022, against an operating loss of $4.1 million and a negative adjusted EBITDA $1.4 million in the third quarter of 2021. In the first nine months, the operating loss was $3.5 million and Adjusted EBITDA was negative $0.2 millioncompared to an operating result of $1.3 million and an adjusted EBITDA of $6.5 million in the same period of 2021.
Operating costs of $6.1 million were 35% lower than in the third quarter of 2021, which included one-time charges of $1.0 million. The cost savings are mainly due to lower personnel costs associated with headcount reductions and a stronger US dollar which had a favorable effect of approximately $0.9 million. The amortization was $1.0 million and stock-based compensation was $32,000. Operating expenses for the first nine months were $20.3 million17% less than the same period of the previous year.
During the first nine months of 2022, the Company invested $11.9 million in property, plant and equipment, including the development of a new head office, and $2.5 million capitalized costs for the development of new products. The company attracted $7.6 million on a construction line of credit in the first nine months and is working to finalize development period financing and structure long-term post-delivery financing.
To September 30, 2022total assets were $67.1 million ($75.4 million at December 31, 2021) and the total equity of $43.0 million ($48.4 million). The translation difference reduced total equity in the first nine months of 2022 by $3.4 millionresulting from a 16% stronger US dollar against the Danish krone.
Working capital at September 30 has been $6.5 million ($20.6 million at December 31, 2021) including $11.0 million cash and cash equivalents ($23.3 million). Long-term debt totals $1.8 million ($1.5 million).
In the third quarter, the company shipped 155,000 sealed-loop coolers, compared to 237,000 in the third quarter of 2021. Eleven new products began shipping in the third quarter, including nine liquid coolers, four of which feature the new technology of 8th generation cooling, and two SimSports products. In the fourth quarter, six new liquid cooling products and at least two new SimSports products are expected to begin shipping.
During the quarter, the company began shipping orders for two new SimSports products – the Forte™ high-performance throttle and brake pedal set and the Pagani Huayra R Sim Racing pedals. Forte pedals allow budding sim racers to experience premium pedals for immersive racing and true race car feel at a competitive price. The Limited Edition Pagani Huayra R Sim Racing Pedals offer the virtual experience of driving a Pagani, the most exclusive hypercar brand in the world.
In July, the company announced an agreement with esports leader Hardpoint to make Asetek’s SimSports racing products available to try and buy at International Motor Sports Association (IMSA) racing events. In August, Asetek participated in Gamescom 2022 Expo in Germanyshowcasing the planned offerings of its upcoming range of SimSports steering wheels and wheelbases.
On October 4, Asetek announced a settlement of the pending patent infringement lawsuit with CoolIT Systems and Corsair Gaming. The settlement is expected to reduce the Company’s future legal expenses beginning in the first quarter of 2023.
Rising inflation and interest rates, combined with the lingering impact of pandemic shutdowns, supply chain disruptions and general geopolitical tensions, continue to delay the normalization of the business climate. The effect is reduced discretionary consumer spending, lower demand for the company’s liquid cooling and SimSports products for gamers and enthusiasts, and continued low visibility in forecasts provided by OEM customers. In this environment, the Company continues to focus on profitability and product development.
On November, 1stthe company provided updated full-year 2022 revenue guidance of approximately $50–$52 million and an operating loss of around $5–$6 million. The updated expectations follow the Company’s temporary suspension of guidance on August 3 this year due to reduced visibility on OEM and end-user customer demand for liquid cooling and SimSports products.
Conference call and webcast
CEO André Sloth Eriksen and CFO Pierre Dam Madsen will present the Company’s results today at 2:00 p.m. CET and invites investors, analysts and the media to join the presentation. The presentation is expected to last up to an hour, including questions and answers, and can be followed via live webcast or conference call.
Webcast – audio presentation and slides:
Please join the results webcast via the following link: https://streams.eventcdn.net/asetek/2022q3/
Conference call – audio only:
Please dial 5-10 minutes before using the phone numbers:
+45 8987 5045
+47 8150 3308
+44 (0) 20 3936 2999
+49 (0) 32 22109 8334
the United States of America
+1 646 664 1960
Access code: 871 727
The publication and presentation of the results for the third quarter of 2022 will be available online at www.asetek.com and www.newsweb.no, as well as through press agencies. A recorded version of the presentation will be available at www.asetek.com about two hours after the end of the presentation.
Questions and answers :
Conference call lines will be open for attendees to ask questions after the presentation is over. Questions can also be submitted via the online webcast during the presentation.
For questions or more information, please contact:
CEO and Founder André
S. Eriksen, +45 2125 7076,
Email: [email protected]
CFO Pierre Dam Madsen,
+45 2080 7200,
email: [email protected]
Asetek (ASTK.OL), a global leader in mechatronics innovation, is a Danish success story from garage to stock market. Founded in 2000, Asetek has established its innovative position as the leading developer and OEM producer of all-in-one liquid coolers for all major PC and gaming enthusiast brands. In 2013, Asetek went public while developing energy efficient and environmentally friendly cooling solutions for data centers. In 2021, Asetek introduced its product line for next level immersive SimSports gaming experiences. Asetek is headquartered in Denmark and has operations in China, Taiwan and United States.
This information is subject to the disclosure requirements in accordance with section 5-12 of the Norwegian Securities Act.
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