DGAP-News: E-mobility Supplier Voltabox Systematically Gears Up for 2020 - Adjusted Cost Structure and Sustainable Growth

E-mobility Supplier Voltabox Systematically Gears Up for 2020 - Adjusted Cost Structure and Sustainable Growth

- Numerous cost reduction measures already implemented in Q3 - 30% reduction of fixed costs expected in fiscal year 2020

- Group revenue increases by 13.2% to EUR 37.9 million after three quarters

- Conversion of diesel buses: Delivery of first battery systems starting in 2020 - significant growth planned for subsequent years

- Good U.S. business expected next year, including business from sales of energy storage systems for 5G networks and for mobile applications

- Outlook for fiscal year 2020: Increase of revenue to EUR 85 million to EUR 100 million with an EBITDA margin of roughly 15% and an EBIT margin between 5% and 7%; free cash flow in the positive single-digit area

Delbrück, Germany, November 13, 2019 - Voltabox AG [ISIN DE000A2E4LE9] published its Group Interim Report as of September 30, 2019, today. In the past quarter, the Group made decisive progress regarding the adjustment of its cost structure following the announced revenue postponements. For the 2020 fiscal year, Voltabox expects revenue growth to EUR 85 million to EUR 100 million with an EBIT margin between 5% and 7%.

"At the beginning of August, we initiated a large number of measures due to foreseeable postponements of revenue, which have now been implemented. We are adjusting our costs in accordance with the postponed business development as quickly as possible," says Jürgen Pampel, Chief Executive Officer of Voltabox AG. "As a matter of course, these revenue postponements and the resulting negative impact on earnings will continue to exert an influence on the second half of the year. The passage of each additional month with our countermeasures in effect brings us closer to normality. As already announced, we are planning to be profitable once again in fiscal year 2020 due to our intended reduction of fixed costs in the coming year by a total of 30%. We are systematically taking advantage of the current phase to structure the future growth trajectory for Voltabox as sustainably as possible."

In accordance with the adjusted forecast, Voltabox achieved revenue of EUR 37.9 million in the first three quarters of the current fiscal year, which corresponds to an increase of 13.2% compared with the same period of the prior year. The revenue generated in the fiscal year to date was achieved primarily through the development, production and sale of battery modules for use in intralogistics vehicles. Voltabox also generated revenue with standardized battery systems in the low voltage range for applications such as pedelecs and e-bikes and battery systems for use in the areas of construction, agriculture and mining.

Against the backdrop of the revenue postponements and the associated negative impact on earnings from corresponding fixed costs, as well as an increased material input ratio resulting from pre-series production, the EBIT margin after three quarters amounted to -30.0% in accordance with expectations. Voltabox immediately responded to the factors that caused the forecast adjustment and has adopted corresponding countermeasures. The package of measures initiated in the third quarter is showing its first effects. Rather than simply stabilizing the earnings situation in the current year, the focus in this context is primarily on achieving a sustainable return to the profit zone in fiscal year 2020. As such, Voltabox has also carried out necessary corrections of its personnel structure and finely adjusted its human resources according to the expected capacity utilization in the coming months.

Value of older generation of cells remains intact

The free cash flow as of the end of the reporting period amounts to EUR -24.9 million. The Voltabox Management Board has reaffirmed its goal of generating a balanced cash flow in the second half of 2019. In this context, major customer Triathlon's agreed repayment of trade receivables that arose in the second half of 2018 is proceeding entirely on schedule.

In addition, Voltabox has successfully converted a portion of inventories into revenue. The Management Board regards this as evidence in support of its market assessment, which holds that the intrinsic value of Voltabox systems with the outgoing generation of cells remains unchanged. Voltabox can use such systems expediently in current projects. The extent to which these will fall in the upcoming fiscal year 2020 is not yet foreseeable. In view of the recent sell-offs, the Voltabox Management Board has decided to permit only such transactions that provide an appropriate contribution to earnings. Even next year, various customers will still need systems with cells of the previous "single-size" format for existing applications that were developed for this cell generation.

"The sustainable growth of Voltabox has absolute priority," explains Klaus Dieter Frers, Supervisory Board Chairman of Voltabox AG. "There is no reason to pay dearly for revenue. We are taking the time that we need. Systematically gearing up the company for a successful year in 2020 is much more important."

The total operating performance of the Voltabox Group in the first nine months of the year amounts to EUR 49.5 million (prior year: EUR 46.0 million). The material input ratio (calculated from the ratio of cost of materials to revenue and inventory changes) increased substantially to 76.6% (prior year: 57.9%) following the expansion of business, mainly due to pre-series production and the typically associated higher procurement prices as well as higher expenses for the use of the existing cell technology. The personnel expense ratio increased to 34.3% (prior year: 26.2%). This is primarily the result of the deviation from the plan in regard to revenue. However, this development was successfully slowed and stabilized.

Earnings Situation Marked by Revenue Postponements - Cash Flow Substantially Improved

As a result of the significant revenue postponements announced on August 12 and the fixed costs geared towards the realization of the originally planned growth, earnings before interest, taxes, depreciation and amortization (EBITDA) substantially decreased as expected to EUR -5.4 million (prior year: EUR 4.9 million), which corresponds to an EBITDA margin of -14.3% (prior year: 14.8%). Earnings before interest and taxes (EBIT) decreased accordingly to
EUR -11.4 million (prior year: EUR 2.3 million).

As of September 30, 2019, total assets had increased by 5.8% to EUR 192.0 million (December 31, 2018: EUR 181.5 million). Noncurrent assets increased by 44.9% to EUR 75.2 million (December 31, 2018: EUR 51.9 million). Current assets decreased by 9.9% to EUR 116.9 million (December 31, 2018: EUR 129.7 million). Inventories increased by EUR 39.6 million to EUR 66.8 million (December 31, 2018: EUR 27.2 million), mainly as a result of the delivery of production materials that will be used primarily in fiscal year 2020 for initiated projects. As planned, trade receivables substantially decreased by EUR 19.3 million to EUR 36.7 million (December 31, 2018: EUR 56.0 million). The equity ratio of Voltabox AG decreased to 74.9% (December 31, 2018: 85.3%) as of the end of the reporting period.

Cash flow from operating activities improved in the period under review to EUR -12.4 million (prior year: EUR -30.1 million). At the same time, cash flow from investment activity also improved in the period under review to EUR -12.6 million (prior year: EUR -16.3 million). While payments for investments in property, plant and equipment in the first nine months of the year were EUR 5.7 million higher than in the same period of the prior year, payments for investments in intangible assets were EUR 0.8 million lower. Cash and cash equivalents totaled EUR 3.4 million (December 31, 2018: EUR 28.2 million) as of the end of the reporting period.

Substantial Improvement of Profitability Planned for 2020

According to the forecast adjusted on August 12 that took into consideration the postponed projects and the resulting delayed project ramp-ups, the Group expects to achieve revenue between EUR 70 and 80 million with an EBIT margin of -8 to -9% in the current fiscal year.

Against the backdrop of the deviation from the forecast that occurred this year, Voltabox applied a new methodology when preparing the plan for fiscal year 2020, which was developed with the support of a renowned auditing and consulting firm. The more precise forecast promises a significantly higher level of planning certainty. On this basis, the consulting firm will also validate the plausibility of the medium-term planning. Based on these conservative and realistic calculations, the Voltabox Management Board expects revenue growth to EUR 85 million to EUR 100 million in the upcoming fiscal year. The EBITDA margin should amount to approximately 15% and the EBIT margin should be in the range of 5% to 7%. According to the planning, free cash flow in 2020 will be in the positive single-digit area. In accordance with the postponed revenue growth, Voltabox plans to make CAPEX investments of roughly EUR 12.5 million, thereof around 70% for capitalized development costs.

Beginning in the upcoming fiscal year, Voltabox will work with the company e-troFit to convert existing diesel buses to electric powertrains. At present, nearly all buses available in the market are powered by a diesel engine. With e-troFit's innovative solution, however, these vehicles can be converted to a modern and sustainable drive concept, normally for less than half the purchase price of a new electric bus. As an important partner, along with the suppliers ZF Friedrichshafen AG and Valeo, Voltabox will deliver the battery systems for the conversion projects. Business from batteries for the conversion of diesel buses will make its first contribution to revenue in the high single-digit million range in the coming year. Voltabox is already working alongside e-troFit and ZF on projects in Germany as well as several in Africa and South America. According to the projects planned by e-troFit, a significant increase in demand for such battery systems for buses and eventually trucks is anticipated in subsequent years. Original equipment is also being pursued.

The production of battery modules and systems for forklifts will remain a revenue driver in fiscal year 2020. The expansion of business from standardized battery packs and batteries for mass market applications in the low voltage range is also contributing to revenue growth. This category encompasses pedelecs, e-bikes and golf carts, as well as starter batteries for high-performance motorcycles and cars. In the coming fiscal year, Voltabox additionally expects to launch stationary and mobile energy storage systems in the USA, including in the 5G area, as well as revenue from two production launches of high-voltage battery systems for mining vehicles from customer Komatsu.

The sustainable expansion of the U.S. site is one of the priorities of the Voltabox Management Board for the current and upcoming years. The newly installed sales system in North America, for example, is already proving to be very effective with respect to geographic distribution and market penetration. In view of structural and personnel adjustments, the Management Board expects the U.S. subsidiary to make a positive contribution to earnings for the first time in fiscal year 2020.

The company's Group interim report as of September 30, 2019, is available for download at https://ir.voltabox.ag.

About Voltabox AG

Voltabox AG (ISIN DE000A2E4LE9), which is listed on the regulated market (Prime Standard) of the Frankfurt Stock Exchange, is a system provider for e-mobility in industrial applications as well as in select mass markets. Its core business lies in intrinsically safe, highly developed high-performance lithium-ion battery systems that are modular and in serial production. The battery systems are used for applications including commercial vehicles, such as buses for public transportation, forklifts, automated guided vehicles and mining vehicles. The company also develops and produces high-quality lithium-ion batteries for select mass-market applications, such as pedelecs and e-bikes as well as starter batteries for high-performance motorcycles and cars.

Voltabox has production sites at its headquarters in Delbrück, Germany, in Austin, Texas, USA, and in Kunshan, China, as well as development sites in Aachen and Markgröningen, Germany.

Additional information about Voltabox can be found at www.voltabox.ag.

Capital Markets & Press Contact

Voltabox AG

Stefan Westemeyer
Artegastrasse 1
33129 Delbrück, Germany
Tel.: +49 (0) 52 50 - 99 30-685
Fax: +49 (0) 52 50 - 99 30-901
Email: [email protected]