Tekna Holding ASA: Third quarter 2024 financial results

07 Nov 2024 07:00 CET

7.11.2024 07:00:00 CET | Tekna Holding ASA | Half yearly financial reports and
audit reports / limited reviews

(Arendal, NORWAY / Sherbrooke QC, CANADA) Tekna Holding ASA (Tekna, OSE: TEKNA),
a world-leading provider of advanced materials to industry, today announces the
company's results for the third quarter of 2024. Despite industry-wide
volatility and seasonal challenges, the company delivered strong operational
improvements and demonstrated resilience across its business lines.

For Q3 2024, Tekna reported progress in profitability, including a
year-over-year ("YoY") increase in contribution margin to 46% (up from 38% in Q3
2023), and a narrowing of adjusted EBITDA loss to CAD 1.4 million from CAD 1.7
million. These results reflect the company's continued focus on cost control,
operational streamlining, and driving growth in its core sectors of advanced
materials and plasma systems.

"We are encouraged by the progress we've made in a challenging market
environment," said Luc Dionne, CEO of Tekna. "Our strategy to increase
efficiency, focus on high-margin product sales, and address customer needs in
key high-growth industries such as aerospace, medical, and consumer electronics
position us well for the future. Our aim remains profitable growth."

Key financial highlights for the third quarter 2024:

* Revenue: CAD 7.6 million (9.1 million), down 16% from Q3 2023
* Adjusted EBITDA: Negative CAD 1.4 million, improving from negative CAD 1.7
million
* Headcount Reduction: Number of employees reduced year-over-year by 15% to 186
employees (203)

Plasma Systems: Short-term challenges, long-term potential

In Plasma Systems, Tekna faced a 43% year-over-year decline in revenues to CAD
2.2 million in the quarter, compared to CAD 3.8 million in Q3 2023. This was
driven by a 51% reduction in order backlog, as slower order intake and delays in
project execution impacted revenue recognition. However, the contribution margin
improved significantly, rising by 19 percentage points to 76%.

Order intake for Plasma Systems was CAD 2.9 million for Q3, up slightly from CAD
2.8 million in Q3 2023. Despite delays in the sales cycle, Tekna remains
confident in the long-term prospects for Plasma Systems, particularly in
aerospace, space technologies, and hypersonic flight applications.

The company currently has a Plasma Systems pipeline valued at over CAD 300
million, with an expected CAD 35 million worth of orders over the next three
years. Tekna anticipates that customer demand in these high-growth sectors will
drive future revenue growth, with a potential PlasmaSonic order expected in
2025.

Advanced Materials: Strong demand in aerospace and medical

Advanced Materials reported revenues of CAD 5.5 million in the quarter, an
increase of 5% compared to same quarter last year, remaining steady at CAD 19.0
million year-to-date. The contribution margin closed at 33%, up 9 percentage
points year-over-year. The order intake totaled CAD 2.9 million in the period
and the backlog stands at CAD 11.5 million at the end of the quarter.

"As previously guided, the quarter was affected by lower activity due to summer
vacation as well as a continued lower demand from one specific customer segment,
the 3D printer manufacturers. Revenues from the other main customer segments
medical and aerospace were higher than last year, confirming our view that Tekna
is maintaining its solid market position," said Luc Dionne.

Tekna's production efficiency also improved, with metal powder production up 39%
year-to-date compared to 2023. This increase was driven by enhancements in
Overall Equipment Effectiveness (OEE) and the addition of new production
systems, which have positioned the company to meet increasing customer demand
and rapidly respond to spot opportunities.

Liquidity and cash flow

Tekna remains focused on managing its liquidity, with a careful approach to cash
flow and working capital. Net working capital improved by CAD 1.1 million since
Q2, and capital expenditures remain tightly controlled, with spending expected
to a total of approximately CAD 2.5 million for the full year (excluding IFRS
16). The cash balance at the end of quarter was CAD 7.6 million.

Outlook: Positive growth drivers ahead

After a few weeks into fourth quarter, the order book for Advanced Materials is
showing signs of recovery - an indication that the growth in demand is picking
up again. The pipeline for new orders for Plasma Systems is strong, but the
timing of these order is somewhat uncertain due to delays in execution of the
customer's project.

In addition to increased revenues, the ongoing profitability improvement program
will have a significant effect on the EBITDA going forward. The cash
preservation measures will also continue to have a positive effect on cash flow.

In Microelectronics (MLCC), Tekna continues to develop its nanomaterials while
maintaining close relations with its potential customers. Recent validation
tests conducted on samples delivered have yielded promising outcomes. Tekna will
deliver an adjusted version of the product in the fourth quarter with feedback
expected early next year.

Tekna's technology and products are well-positioned in a global market
characterized by geopolitical uncertainty, economic instability, and an
increasing emphasis on sustainable production. Additive manufacturing remains
Tekna's core business focus, with the market projected to grow by more than 20%
annually. "While we continue to manage the short-term challenges in some of our
businesses, we are positioned for long-term profitable growth," said Luc Dionne.

Results presentation

Tekna will host a short presentation of the financial results for the third
quarter and a Q&A session today at 19:00 CET. The results will be presented by
CEO Luc Dionne and CFO Espen Schie of Tekna Holding ASA, and the event will be
made available via a live webcast. Click the following link to register and gain
access to the webcast: https://www.tekna.com/investors/webcast-2024q3

To submit questions before, during, or after the webcast, please email
investors@tekna.com or use the Q&A section on
https://investorweb.no/ir-channel/TEKNA/q&a. A recorded version of the webcast
will be available shortly after the webcast has concluded.

For more information, please see the third quarter report, which is attached to
this notice and available at http://www.tekna.com - http://www.tekna.com/.

DISCLOSURE REGULATION

This information is subject to the disclosure requirements pursuant to Section
5-12 of the Norwegian Securities Trading Act.

CONTACTS

* Arina Van Oost, Investor Relations | VP Corporate Strategic Development &
Innovation, Tekna Holding ASA, +33670115190, investors@tekna.com

ABOUT TEKNA HOLDING ASA

Tekna is a world-leading provider of advanced materials to industry,
headquartered in Sherbrooke, Canada.

Tekna produces high-purity metal powders for applications such as 3D printing in
the aerospace, medical and automotive sectors, as well as optimized induction
plasma systems for industrial research and production. With its unique,
IP-protected plasma technology, the company is well positioned in the growing
market for advanced nanomaterials within the electronics and batteries
industries.

Building on 30 years of delivering excellence, Tekna is a global player
recognized for its quality products and its commitment to its large base of
multinational blue-chip customers. Tekna's powder products increase productivity
and enable more efficient use of materials, thereby paving the way towards a
more resilient supply chain and circular economy.

https://www.tekna.com



ATTACHMENTS

Download announcement as PDF.pdf -
https://kommunikasjon.ntb.no/ir-files/17847682/18313609/5215/Download%20announce
ment%20as%20PDF.pdf

Tekna 2024Q3 report vF.pdf -
https://kommunikasjon.ntb.no/ir-files/17847682/18313609/5213/Tekna%202024Q3%20re
port%20vF.pdf

More information:
Access the news on Oslo Bors NewsWeb site

631479_Tekna 2024Q3 report vF.pdf
631479_Download announcement as PDF.pdf