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Interim Report January-September 2021
Deliveries have started, and ChromoGenics improved its earnings
Third quarter of 2021
- ChromoGenics began in-house production of its dynamic glass ConverLight® Dynamic at the end of May at a slow rate to reduce the risk of production disruptions. During the quarter, the rate of production was gradually increased with several deliveries to our customers.
- After ChromoGenics completed the long-term tests of the in-house dynamic glass ConverLight® Dynamic in mid-June, the top priority has been the post-inspection. Our focus is now on increasing the rate of production step by step in a quality-assured manner.
- The first dynamic glass from ChromoGenics’ factory in Uppsala was installed at the end of June in a building in Uppsala, and this work will continue into the fourth quarter.
- At the beginning of September, ChromoGenics delivered the first dynamic glass for the order from the Norwegian construction company Betonmast for the Gullhaugs Torg project in Oslo. In total, ChromoGenics will deliver approximately 4,000 m2 of dynamic and static glass to an environmentally certified building that is under construction.
- The operating loss for Q3 2021 amounted to SEK -6.3 (-14.4) million, which is the best individual operating profit for a quarter since the company was floated in 2017. An improvement of SEK 8.1 million compared to the corresponding period in 2020.
- The action plan introduced in March 2020 to reduce the company’s operating costs continued to have a major impact in Q3 2021. Operating costs increased by around SEK 2.0 million compared to the corresponding period in 2020 due to the production increase and delivered goods. In total during the first nine months of the year, the costs savings amounted to approximately SEK 22 million.
- Order intake for the third quarter amounted to SEK 4.3 (1.4) million. Delivery began in September on the large order totaling SEK 23.3 million from Betonmast Oslo AS in Norway for the products ConverLight® Dynamic and ConverLight® Paragon ECO for installation in an environmentally certified building that is being built at Gullhaugs Torg 5 in Oslo, Norway. During the quarter, the company received add-on orders in the project of around SEK 3.5 million for services and components.
- The order volume going into Q4 2021 amounts to SEK 24.8 (9.7) million.
- Several customers have waited until we were able to confirm the delivery date before placing their orders for dynamic glass with the film we produce in-house. We were able to announce such confirmation at the end of the quarter. Our sales team is now working to increase its contact with customers and raise the value of our sales pipeline and order book with additional new business for delivery in 2022.
- Some customers have glass that was delivered before ChromoGenics started its in-house production and would like the glass to be replaced within the coming year. We have begun planning to rectify a number of faulty delivery projects.
- Net sales for Q3 2021 amounted to SEK 7.7 (3.5) million, and earnings amounted to SEK -7.3 (-15.1) million, which corresponds to earnings per share of SEK -1.03 (-2.14), basic, including warrants (TO3) from the unit issue in December 2020.
- Cash and cash equivalents amounted to SEK 28.2 (21.3) million on September 30, 2021.
- On June 23, Fredrik Fränding was named the new CEO of ChromoGenics. Leif Ljungqvist stepped down to retire.
- The first utilization period for warrants of the series 2020/2022 expired on September 27. In total, 61,576 warrants were utilized for subscription of an equal number of shares at a subscription price of SEK 8.00 per share. The number of shares in ChromoGenics increased to 17,037,595, and the share capital increased by SEK 12,315.20 to SEK 3,407,519.00. The Swedish Companies Registration Office registered the issue on September 30, 2021.
EARNINGS PERFORMANCE IN SUMMARY
|EPS before dilution, SEK||-1,03||-2,14||-6,75||-9,65||-11,26|
|EPS after dilution, SEK||-0,60||-2,14||-3,96||-9,65||-5,25|
|Cash and bank end of the period||28,2||21,3||28,2||21,3||93,4|
EVENTS AFTER THE END OF THE PERIOD
- On October 5, ChromoGenics announced it had received new orders for ConverLight® Static of around SEK 1.1 million from Humlegården and others with delivery in the fourth quarter. The orders are related to an upgrade by switching out the glass in existing windows in two office buildings in Solna to ConverLight® Static.
- On November 3, ChromoGenics announced that the deliveries were delayed due to material shortages and capacity limitations in the supply chain. The final deliveries to the end customer Betonmast for the Gullhaugs Torg project in Oslo are estimated to be delayed by eight weeks. Invoicing and incoming cash flow is judged to be affected to the same extent.
- ChromoGenics also experienced disruptions in its own production process. The problem was identified, and the solution was expected to be validated at the end of November. Production in the factory was stopped until further notice. The assessment was made that the production standstill does not create additional delays in the Gullhaugs Torg project since at that point in time the supply chain was the bottleneck. Final deliveries to Vasakronan for the Hästen project were judged to be delayed by an additional three weeks.
- On November 8, ChromoGenics received a new order of SEK 1.2 million for ConverLight® Dynamic glass for an office building in Bergen, Norway.
- On November 10, ChromoGenics signed an agreement for a new order together with window manufacturer LEIAB for delivery of ConverLight® Dynamic glass to a nursing home in Skara.
Comments from the CEO
ChromoGenics took great strides during the quarter in its transition from a development company to an industrial company. We have delivered to customers and invoiced SEK 7.7 million, which is the best quarterly result since the company was floated in 2017.
The sputtering factory has been running three shifts for large parts of the quarter, including weekends. Film production and glass lamination have been consistently working two shifts. The focus for the entire organization is and has been to increase production in a quality-assured manner. Our employees have worked hard, and we are very grateful for their contributions.
During the quarter, we appointed two production engineers and made some organizational changes to further strengthen production management and method development and make continuous improvements. We also brought in global experts in our type of sputtering process both to ensure that we are choosing the right path to increase production capacity and to develop our own competence.
We achieved over several days in the quarter a production rate corresponding to 200 m2 of completed glass a week, which is the level we are striving for and plan to maintain from the start of the new year. We are planning to further increase the rate of production in 2022.
Delivery chains around the world are uncertain right now, and this has also had an impact on ChromoGenics. Delivery times for glass are not only longer but also uncertain. Our subcontractors have not successfully reached planned volumes due to material shortages and capacity limitations. The final deliveries to the end customer Betonmast for the project at Gullhaugs Torg in Oslo are therefore delayed by an estimate of eight weeks, which has a corresponding impact on our invoicing and cash flow.
After the end of the quarter, ChromoGenics also experienced disruptions in its production process. The problem has been identified, and we estimate that the solution will be validated at the end November. Production in the factory is at a standstill until further notice. Our assessment is that the production interruption will not create additional delays in the Gullhaugs Torg project since the supply chain is the bottleneck. Final deliveries to Vasakronan for the Hästen project are judged to be delayed by an additional three weeks.
We view these delays very seriously as they affect customers’ trust in us. At the same time, our own ability to rapidly identify and resolve quality deficiencies has been enhanced.
The third quarter represents in many ways a new start for our sales work since we were able at the end of the quarter to finally begin to confirm delivery times for new orders. We are also in the planning stage for a number of faulty delivery projects.
We have further strengthened the sales team with an experienced business developer, who has been able to immediately contribute to our sales work. During the quarter we also accelerated our marketing, primarily in social media and through participation in industry-specific customer events and trade shows. Thanks to these efforts, we increased the value of our sales pipeline. Order intake also increased during the quarter.
After the end of the quarter, we signed an agreement valued at SEK 1.2 million with the Norwegian company Nordvestvinduet for delivery of dynamic glass to an office building in Bergen, Norway. We also signed an agreement to deliver in collaboration with LEIAB dynamic glass windows to a nursing home in Skara to improve the well-being of the residents.
Our solutions contribute to improved well-being indoors for everyone. Scientific studies show productivity gains of between 8 and 20 percent among office workers. Well-being increases in particular for those with dementia and psychiatric illnesses, who often find sharp shadow lines stressful. We are seeing strong interest in our products, in particular from special housing.
The quarter has been a challenge, but we have taken steps in the right direction and are seeing a positive trend, especially in our earnings. Our focus is on restarting production in a quality-assured manner and continuing to increase the capacity of our in-house production, increase the rate of sales and marketing, and accelerate our transformation into an industrial company.
Fredrik Fränding, CEO
For more information, please contact:
This information constitutes such information that ChromoGenics AB (publ) is obligated to disclose in accordance with the EU Market Abuse Regulation. The information was submitted by the above-mentioned contact persons for publication on November 12, 2021, at 08:30 CET.
This statement has been made in a Swedish and English version. In the event of any discrepancies between the Swedish and English text, the Swedish text shall prevail
Chromogenics is a proptech company that produces dynamic glass for real estate. The company’s product ConverLight® Dynamic, controls indoor comfort with high daylight transmission, great view and solar heat blocking and thereby reduces cost of cooling. ConverLight® Dynamic is based on a patented solution where electrochromic coatings are laminated in plastic film and then laminated between glass. The plastic film is easy to transport, so long shipments of bulky glass can be avoided. ChromoGenics also offers static glass, ConverLight® Static, and the ConverLight® Energy facade glass solution. ChromoGenics’ stock was listed on Nasdaq First North Growth Market in 2017 and has supplied glass technology to several major real estate companies.
ChromoGenics originates from world-leading research at Ångströmlaboratoriet at Uppsala University. The company’s production facility in Uppsala has been partially financed with conditional loans from Energimyndigheten (Energy Authority) in Sweden. ChromoGenics’ share (CHRO) is listed on Nasdaq First North Growth Market with Erik Penser Bank as Certified Adviser: email@example.com, 08-463 83 00.