Egide: 2022 Half year results
Bollène (France), October 25, 2022 – 07 :00 am (CET)Press
Release
2022 Half year results
- H1 2022 sales at €16.02m: -
3.5% YoY, Egide SA (+4.5%) and Santier (+4.9%) sales do not fully
compensate for the decrease in Egide USA sales
(-20.5%)
- Consolidated operating
income: - €1.294 million,
affected by recruitment and supply difficulties in the United
States
- Net income: - €2.016
million, the losses of the American entities not being offset by
the capital gain on the sale of the Cambridge building
in IFRS treatment in the consolidation.
-
Outlook:
- The Group expects an improvement in
the second half of 2022.
- Some promising commercial
negotiations are underway both in France and the USA.
- Difficulties related to price
increases, in particular for energy and chemical products, are
anticipated, with consequent negotiation of sales price
increases.
The Audit Committee and the Board of Directors
met to approve the half-year financial results as of June 30, 2022.
As a reminder, on Euronext Growth, the half-year financial
statements are not submitted to an audit by the statutory auditors
(Euronext Growth Rules, art. 4.2.1). The financial statements
presented below are not and will not be audited.
The Egide Group's consolidated EBITDA (adjusted
from IFRS16) for the six months ended June 30, 2022, amounts to
€1.87 million.
First-half Results consolidated P&L(In €m) |
H1 2021 |
As a percentage of revenues |
H1 2022 |
As a percentage of revenues |
Sales |
16.60 |
|
16.02 |
|
Current EBITDA * |
1.19 |
7% |
1.87 |
11% |
Operating Income (Ebit) |
0.52 |
3% |
(1.29) |
(8%) |
Net Income |
0.24 |
1% |
(2.02) |
(13%) |
*Ebitda corrected from IFRS16
CONSOLIDATED FINANCIALS AS OF JUNE 30,
2022
The Egide group's consolidated revenues for the
first half of 2022 were €16.02 million, down 3.5% compared with the
first half of 2021, despite a 4.5% increase in sales at Egide SA
and a 4.9% increase at Santier, which did not fully offset the
20.5% decrease in sales at Egide USA, which was favorably impacted
by an exchange rate effect, since in constant dollars the group's
growth would have been negative 8.2% (In US$, Egide USA revenue is
down 27.9% and Santier is down 4.8%).
These results are mainly explained by the
difficulties in recruiting personnel and supply that have disrupted
US production. Measures have been taken to increase the salaries of
the direct labor force, but the situation remains tense.
In terms of business, with the replacement of
the Bollène facility manager and the Cambridge facility manager,
the group continued to renew its management with the arrival of
David Hien to manage the factory in Bollène (France) and Terry Toh
for the one in Cambridge (USA).
Thus, the highlights of the activity of the 3
sites can be analyzed as follows:
- Egide SA continues to grow and
consolidates its leadership position in the thermal imaging market
in Europe (notably with the acquisition of new customers), Asia
(China and South Korea) and the Middle East. The strategy focused
on the development of high quality packages for power, optronics
and microwave applications continues to be successful with new
projects, in line with the production tool modernization plan,
currently being deployed.
- Egide USA has been heavily impacted
by the labor shortage in the United States, despite adjusting
salary schedules to above-market levels. As new employees were
brought into the plant, training and "rework" affected operational
efficiency. Despite these industrial difficulties, which are
beginning to subside, business activity and order backlog are high,
thanks in particular to the thermal battery and defense sectors.
The order book is solid.
- Santier's business improved in the
first half of the year, but like the Cambridge plant, San Diego is
suffering from the same U.S. labor market and supply chain
issues.
Sales in dollars accounted for 52% of the group's total revenues
in the first half of 2022.
RESULTS AS OF JUNE 30, 2022The
split by entity of the consolidated operating result is as
follows:Egide SA, (37k€)For Egide USA, (312k€)For Santier (879k€),
including (345k€) additional goodwill impairment.
The results of the US companies are mainly
impacted by the problems of the US labor market, supply
difficulties and other inefficiencies related to the need to train
incoming staff.
The non-recurring operating income and expenses
for the first half of 2022 mainly concern the sale of the Cambridge
building. The accounting impact before IFRS treatment of this sale
represents a capital gain of €2,952k, however the IFRS 16 treatment
of lease-back transactions is extremely restrictive and only
recognizes a capital gain of €160k. The major difference comes from
the reclassification of €2,450k in financial debt and not in
profit. The subsequent corollary, during the entire term of the
lease, will be an appreciation in loan repayment and interest of a
large part of the rent.
The immediate consequence is that, unlike what
had been anticipated, the first-half losses of the American
entities are not offset by the capital gain on the sale of the
building.
Beyond this initial impact, it was decided to
recognize taxes on this capital gain in the amount of the remaining
deferred tax asset, i.e., €534k.
In addition, an impairment loss was recognized
which led to the recognition of an additional impairment of the
goodwill of Santier Inc. of €345k.
IFRS 16 has reclassified €336k of rental income
into €242k of depreciation and €68k of interest, over H1 2022.
The consolidated net result was thus negative by
K€ 2016. CONSOLIDATED BALANCE SHEET AS OF
JUNE 30, 2022
ACTIF |
PASSIF |
|
Dec 2021 |
June 2022 |
|
Dec 2021 |
June 2022 |
Non-current assets |
12.85 |
11.05 |
Shareholders’ Equity |
11.57 |
10.32 |
Inventory, trade, and other receivables |
13.86 |
15.91 |
Financial debt and provisions |
4.71 |
7.77 |
Cash |
1.59 |
3.89 |
Trade and other payables. |
12.02 |
12.76 |
TOTAL |
28.30 |
30.85 |
TOTAL |
28.30 |
30.85 |
Capital expenditure for the half-year were
€483k, including €245k at Egide SA, €160k at Egide USA and €78k at
Santier. The working capital requirement (inventories + account
receivables + other current assets – accounts payable - other
current liabilities) is 104 days of sales, compared to 95 days on
June 30, 2021.
Financial debts are mainly composed of 3 PGE
loans for €1,142k from Egide SA, equipment loans for €748k from
Egide USA and Santier. It should be noted that these American loans
do not comply with the Covenants and have therefore all been
reclassified as short-term. Egide SA also has 615k€ of other loans,
including 456k€ for financing the Research Tax Credit.
The IFRS treatment of the factor has
reintegrated the €1,558k of financed receivables into debt and
accounts receivable. On the other hand, two revolving credit
facilities to finance working capital are used in the USA for
€1,129k and €1,239k respectively by Egide USA and Santier. These
two accounts receivable and inventory financing facilities were
contracted with the Banc of California, which does not wish to
continue its relationship with the group.
REVIEW OF THE US ENTITY FINANCING
SITUATION.
In the USA, the need to replace the current
banking partner (Banc of California) at its request was a major
disruptive factor, causing a delay in the publication of the
Group's 2021 annual reports and constituting a going concern risk.
This risk has been greatly reduced thanks to a $6 million
lease-back of the Cambridge building, in return for the repayment
of the corresponding $1.2 million outstanding real estate loan.
This refinancing operation should be a key point in the resolution
of the group's financing problems in the USA.
However, as of June 30, 2022, and at the date of
publication of these financial statements, the replacement for this
American banking partner has not yet been finalized. Gibraltar,
which had been presented as a potential successor, seems to have
requirements difficult to meet and further talks have started with
other players.
The deadline has been extended with Banc of
California, to December 31, 2022, and the group's management is
confident about the outcome of the current financing search.
OUTLOOK
The Group expects some improvement in the second
half of the year without any favorable or unfavorable events. Some
promising commercial negotiations are underway both in France and
in the USA, which would allow a return to healthy growth at least
for 2023.
In addition to the staffing problems already
mentioned, the group will be facing difficulties linked to price
increases, particularly for energy and chemicals. The energy
situation has not yet changed much, as supply contracts are still
running. Moreover, while energy prices have risen five or tenfold
in Europe, they have "only" increased by 50% in the USA. The group
is taking measures to negotiate price increases with its customers,
including on multi-year orders.The objectives of modernizing the
group's production tool are still valid, to which are now added
more ecological objectives and drastic energy savings.
Jim Collins, President, and CEO of Egide,
comments: "It has been a difficult recovery from the pandemic and
the industrial fire at our Cambridge facility. In the United
States, recruitment difficulties have had a negative impact on our
business. The lack of an available skilled workforce has required
us to hire entry-level workers while increasing the cost of our
existing workforce to retain them. In addition, our metal component
suppliers are experiencing the same labor issues, as well as
limited availability of special metal materials. This has disrupted
our supply chain for these components. The result is significant
delays in delivery of existing orders. While the company is working
to resolve recruitment and supply chain delays, our customer base
remains loyal."
He concluded: "Our Bollène plant has stabilized
at break-even in terms of profitability, a major improvement over
the past years. The prospect of increased revenue is encouraging
for continued improvement. At the Group level, new opportunities
have appeared in all our market segments in Europe and the United
States. We are therefore ready to take the necessary steps to seize
these opportunities. The result will be increased revenue and
profitability."
FINANCIAL CALENDAR
Half Year 2021
Results presentation to analysts & Investors – Video
Conference |
October 25, 2022 – 11 :30 am Paris Time |
Availability of the 2022 Half-Year Financial Report |
October 26,
2022 |
2022 full
year sales |
January 26,
2023 |
CONTACTS
EGIDE – Luc Ardon –
CFO - +33 4 90 30 35 94 –
luc.ardon@fr.egide-group.com
FIN’EXTENSO – Press Relations - Isabelle
Aprile - +33 1 39 97 61 22 – i.aprile@finextenso.fr
About Egide
-
www.egide-group.com
Egide is a group with an
international dimension, specialized in the manufacture of hermetic
packages and heat dissipation solutions for sensitive electronic
components. It operates in cutting edge markets with strong
technology barriers to entry in all critical industry segments
(Thermal Imaging. Optronics. High-Frequency. Power Units…). Egide
is the only pure player in this market niche with manufacturing
bases in France and the United States.
EGIDE is listed Euronext Growth Paris™-
ISIN : FR0000072373 - Mnémo : ALGID
Keep up to date with all the Group's news online:
www.egide-group.com and LinkedIn
- Egide-PR-2022-HY-results-221025-EN
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