Strong installation revenue boosts operating result‌‌

Third Quarter 2016
  • Revenue for Period: SEK 23.8 million (SEK 20.6 million)
  • Operating Result: SEK 11.2 million (SEK 7.1 million)
  • Earnings per Share: SEK 1.6 per share (SEK 1.0 per share)
  • Cashflow from Operations: SEK 7.0 million (SEK 6.5 million)
  • Record Sampling Cup shipments; up 38% year-on-year

  • System 3000 Plus delivered to Teksid in Brazil; installation planned for first quarter 2017

  • Ladle TrackerTM technology well-received; installation discussions underway

    2016 Year-to-Date
  • Revenue for Period: SEK 58.2 million (SEK 55.2 million)
  • Operating Result: SEK 21.6 million (SEK 15.9 million)
  • Earnings per Share: SEK 3.1 per share (SEK 2.3 per share)
  • Cashflow from Operations: SEK 14.4 million (SEK 15.8 million)
  • Installed Base: 24 fully automated systems and 20 mini-systems in Europe, Asia and the Americas
Series Production*

Annualised series production amounted to 2.0 million Engine Equivalents in the third quarter, reflecting a seasonal reduction due to the annual summer shutdown period at many foundries and OEMs.

* Annualised average production of Engine Equivalents during the quarter (1 Engine Equivalent = 50 kg)

CEO Comments Stable series production and strong installation revenue

Series production remained stable in the third quarter, recording the seventh consecutive quarter with volume at or above the two million Engine Equivalent threshold. The volume in the third quarter was 5-10% lower than the first two quarters of the year, due to the annual summer shutdown at many foundries and OEMs during July and August. Despite the reduction in the third quarter, the year-to-date volume in 2016 represents the highest all-time production for the January to September period. Sampling Cup shipments remain at a high level, with third quarter shipments 38% above the same period last year and year-to-date shipments up 19% compared to 2015.

The overall outlook for series production remains positive, with the pick-up sector in the United States continuing to perform well as demand remains strong for full size vehicles. The 2017 Ford Super Duty pick- up, with a take-rate of more than 80% for the SinterCast-CGI V8 diesel engine, won the Truck of Texas award at the Texas State Fair in September. The Truck of Texas title is regarded as one of the most prestigious awards in the industry, with more than 20% of all pick-ups in the United States being sold in Texas. Following the Ram EcoDiesel in 2013; the Ford F-150 V6 petrol engine in 2014; and the Nissan Titan XD 5.0L V8 diesel in 2015, the 2016 victory for the Ford Super Duty marks the fourth consecutive year that a truck with a SinterCast-CGI engine has won the coveted award. The outlook for commercial vehicle production also remains positive with continued ramp-up of heavy duty engine programmes for European OEMs and with successful product development and pre-production at the ASIMCO foundry in China for domestic medium duty and heavy duty engine programmes.

Following the delivery of the System 3000 Plus to the Teksid foundry in Brazil, installation revenue increased significantly during the third quarter. The installation planning is currently underway and the foundry is preparing the infrastructure for the equipment. The installation is expected to be commissioned during the first quarter of 2017. Installation discussions are also underway with several other customers, including the expansion of current installations to increase capacity; functionality upgrades to accommodate customer

requests for additional process control features; and, new installations. The recent installation activity has been augmented by the introduction of the Ladle TrackerTM technology, which has been well-received in the industry. At present, Ladle TrackerTM installation discussions are ongoing with current SinterCast customers, with ductile iron foundries and with metallurgical plants beyond the cast iron foundry industry. These initial discussions have identified new opportunities to expand the tracking capabilities that SinterCast can bring to the industry. In addition to these new development opportunities, SinterCast is also investigating the development of other unique technologies - within and beyond the scope of thermal

analysis - to improve quality and production efficiency in the cast iron foundry industry.

Financial Summary Revenue

The revenue for the SinterCast Group relates primarily to income from equipment, series production and engineering service.

Number of Sampling Cups shipped

50,900

36,900

133,800

112,000

Equipment 1

5.9

5.0

6.7

7.3

Series Production 2

17.4

15.3

50.1

47.0

Engineering Service 3

0.5

0.3

1.4

0.8

Other

0.0

0.0

0.0

0.1

Total

23.8

20.6

58.2

55.2

Notes:

1.

Includes revenue from system sales and leases and sales of spare parts

2.

Includes revenue from production fees, consumables and software licence fees

3.

Includes revenue from technical support, on-site trials and sales of test pieces

Revenue Breakdown

July-September

January-September

(Amounts in SEK million if not otherwise stated)

2016 2015

2016 2015

The July-September 2016 revenue amounted to SEK 23.8 million (SEK 20.6 million). Revenue from series production increased by 14% to SEK 17.4 million (SEK 15.3 million), due to the increased shipment of 50,900 (36,900) Sampling Cups. The annualised production amounted to approximately 2.0 million (2.0 million) Engine Equivalents. Equipment revenue amounted to SEK 5.9 million (SEK 5.0 million) following the delivery of the System 3000 Plus installation to Teksid do Brazil. Engineering Service amounted to SEK 0.5 million (SEK 0.3 million) following support provided to various customers globally and the sale of test pieces.

The January-September 2016 revenue amounted to SEK 58.2 million (SEK 55.2 million). Revenue from series production increased by 7% to SEK 50.1 million (SEK 47.0 million), due to the increased shipment of 133,800 (112,000) Sampling Cups and a 1% increase of the series production. Equipment revenue decreased to SEK 6.7 million (SEK 7.3 million), despite the Teksid installation, as a result of the very strong installation activity in 2015. Engineering Service amounted to SEK 1.4 million (SEK 0.8 million) following support provided to various customers globally and the sale of test pieces.

Results

The business activities of SinterCast are best reflected by the Operating Result. This is because the "Result for the period after tax" and the "Earnings per Share" are influenced by the financial income and costs and by the revaluation of tax assets.

Results Summary

July-September

(Amounts in SEK million if not otherwise stated)

2016

2015

2016 2015

Operating Result

11.2

7.1

21.6 15.9

Result for the period after tax

11.0

6.9

21.7 16.2

Earnings per Share (SEK)

1.6

1.0

3.1 2.3

er

The July-September 2016 operating result of SEK 11.2 million (SEK 7.1 million) increased by SEK 4.1 million as a result of higher gross results of SEK 3.3 million primarily derived from higher revenue, combined with decreased operating costs of SEK 1.1 million and decreased other operating income (net exchange gains) of SEK 0.3 million.

The result for the period after tax amounted to SEK 11.0 million (SEK 6.9 million). The increase of SEK 4.1 million is primarily related to the increased operating result of SEK 4.1 million, the decreased financial net of SEK 0.1 million (primarily unrealised revaluation losses derived from outstanding hedge contracts) and decreased tax expenses of SEK 0.1 million.

The January-September 2016 Operating Result of SEK 21.6 million (SEK 15.9 million), increased by SEK

5.7 million as a result of higher gross results of SEK 3.4 million primarily derived from higher revenue, combined with decreased operating costs of SEK 1.1 million and increased other operating income (exchange gains) of SEK 0.6 million and decreased other operating costs (exchange losses) of SEK 0.6 million.

The Result for the period after tax amounted to SEK 21.7 million (SEK 16.2 million), increased by SEK 5.5 million, primarily related to the increased operating result of SEK 5.7 million, a SEK 0.3 million decrease in the financial net (primarily unrealised revaluation losses derived from outstanding hedge contracts) and increased tax income of SEK 0.1 million.

Deferred Tax Asset

Tax for the January-September 2016 period amounted to SEK 1.0 million (SEK 0.9 million). The estimated future taxable profit and deferred tax asset calculation is reassessed every quarter. As of 30 September 2016, SEK 142.3 million (SEK 137.8 million) of SinterCast's total carried-forward tax losses have been used as the basis of the updated calculation, resulting in SEK 31.3 million (SEK 30.3 million) being capitalised as a deferred tax asset.

Cashflow, Liquidity and Investments

Cashflow Summary 2016 Year-to-Date January-September Cashflow Changes

(Amounts in SEK million if not otherwise stated)

2016

2015

2016 vs. 2015

Cashflow from operations, before change in working capital

21.5

16.7

4.8

Change in working capital

-7.1

-0.9

-6.2

Cashflow from operations

14.4

15.8

-1.4

Cashflow from investing activities

-1.7

-1.4

-0.3

Cashflow from financing activities

-24.8

-15.6

-9.2

Cashflow total

-12.1

-1.2

-10.9

Liquidity

35.9

43.7

The January-September 2016 cashflow from operations decreased by SEK 1.4 million compared to the same period in 2015. This was primarily due to the net effect of an increase of SEK 4.8 million in cashflow from operations before changes in working capital, plus changes in working capital (SEK -6.2 million), derived from changed cashflow from inventory (SEK -0.1 million), receivables (SEK -4.1 million) and operating liabilities (SEK -2.0 million).

The total cashflow decreased by SEK 10.9 million following the dividend of SEK 24.8 million (SEK 15.6 million). Total investments amounted to SEK 1.7 million, primarily related to the activation of products under development (SEK 0.8 million), patent investments (SEK 0.3 million), production equipment (SEK 0.4 million) and facilities upgrades (SEK 0.2 million). The total cashflow amounted to SEK -12.1 million (SEK -1.2 million).

Liquidity on 30 September 2016 was SEK 35.9 million (SEK 43.7 million). SinterCast has no loans.

SinterCast AB published this content on 23 November 2016 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 23 November 2016 08:12:07 UTC.

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