Wellington Drive Technologies (Wellington), a leading provider of Internet of Things (IoT) solutions and energy efficient motors to the retail food and beverage industry, today announced its unaudited trading performance for the three months ended 31 March 2019 (Q1 2019).
• Revenue for Q1 2019 improved 33%, to $15.8m compared to $11.9m in Q1 last year.
• IoT revenue comprised $6.5m of the total (41%), with Wellington Connect SCS volume growing 99%. ECR motors comprised $8.2m (52%) with ECR2 motor volume growing 56%. Non-ECR2 motor volume declined 29%.
• Gross profit for Q1 2019 was $4.1m, a gross margin of 26.2%. This compared to Q1 2018 $2.8m and 23.3%. The improvement was due to product mix (increased volume of higher margin products) and unit cost reductions. The pressure from additional costs experienced last year caused by global supply constraints for electronic components abated in the current quarter.
• Earnings before interest, tax, depreciation, amortisation and impairment (EBITDA) was $1.1m compared to $0.0m for Q1 2018. Earnings before interest and tax (EBIT) was a positive $0.5m compared to a loss of $0.4m for Q1 2018.
• The pre-tax result was a profit of $0.2m compared to a $0.6m loss in Q1 2018.
CEO Greg Allen commented “We are pleased with our first quarter performance, which continues to demonstrate the growing demand for the Wellington Connect IoT and ECR2 products. Some of the IoT customers we won in 2018 are starting to purchase product, while growth in ECR2 motors was off-set slightly by declines in the non-ECR2 motors. This was mainly due to decisions we made to not compete at the lower end of the motor price point. Our new business development funnel is very active; however due to the lead-time on hiring new growth-related skills we are prioritising existing customer growth projects. We do expect the first half of the year to be stronger than 2018 in both revenue and margin, with the second half still unclear and potentially weaker – hence we are maintaining previous guidance”.
The result for Q1 2019 is consistent with previous guidance and our guidance for FY 2019 therefore remains unchanged. The company’s total revenue in 2019 is expected to be flat to slightly up when compared to 2018. The company’s business mix is changing and is increasingly targeted to its higher margin IoT products. Accordingly, EBITDA1, Net Profit and operating cashflow are expected to be higher in 2019 when compared to 2018.
1 EBITDA (i.e. Earnings before interest, taxation, depreciation, amortisation and impairment) is a non-GAAP earnings figure that equity analysts tend to focus on for comparable company performance analysis. Wellington considers that is a useful financial indicator because it avoids the distortions caused by differences in amortisation and impairment policies.