GuruFocus -
- Revenue Growth: 3% growth in Q3, 12% growth over the last 12 months.
- Order Intake: Significant order of 165 million SEK for subsystems from an Italian manufacturer.
- Gross Margin: Currently above 30%, with fluctuations due to product mix and exchange rates.
- Operating Cash Flow: -7.4 million SEK for the quarter, with improvements expected in Q4.
- Production Scale: First-time ongoing scale production with over 100 systems planned.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- PowerCell Sweden AB (PCELF) reported a 3% growth in the quarter and 12% growth over the last 12 months, indicating a positive trend despite previous soft market conditions.
- The company secured a large order worth 165 million SEK from an Italian manufacturer, marking a significant milestone and establishing ongoing scale production for the first time.
- PowerCell Sweden AB (PCELF) received approval in principle for a methanol-to-electricity solution, which is expected to create value in the marine market.
- The negotiation-to-delivery cycle has significantly shortened from five years to 18 months, allowing for faster revenue realization and indicating more mature customer relationships.
- The company is expanding in the US market and has a strong industrial setup, positioning it well for future growth and market acceleration.
- PowerCell Sweden AB (PCELF) experienced a downward trend in gross margins, attributed to product mix and exchange rate fluctuations.
- Operating cash flow was negative at -7.4 million SEK for the quarter, although there is an expectation of improvement in the fourth quarter.
- The company is still in a phase of managing operating leverage, indicating ongoing challenges in balancing growth and cost management.
- There is a noted slowdown in battery electrification requirements, which could impact the adoption of hydrogen solutions in certain markets.
- The transition in the power generation segment has been slower than expected, with the company acknowledging it has not yet reached its full potential.
A: We are seeing both follow-up orders and new customers, which is crucial for us. The soft market earlier in 2024 was due to a transition from project sales to more complex contracts. However, post-summer, there's been a shift with increased market activity and higher average order values across all segments, including marine, power generation, and aviation.
Q: Regarding the marine order, will there be recognized revenue in Q4, even though deliveries are expected in 2025?
A: Deliveries will proceed as expected. Revenue recognition will follow the percentage of completion method. Work on the project will start quickly, allowing us to recognize some revenue in Q4.
Q: Why is the gross margin lower compared to historical levels, and what should we expect for the future?
A: The variation in gross margin is due to different revenue sources and currency changes. While we aim for a strong and sustainable model, we do not comment on future forecasts. Our focus remains on maintaining a healthy margin to support long-term business sustainability and innovation.
Q: Is the delivery to Norwegian ferries still expected to be completed by 2024, and is most of the sales to Norway related to this order?
A: We have not stated that the delivery will be completed by 2024. The shipyard selection was delayed, but the majority of revenue from Norway is related to this customer. We expect continued revenue from this project into 2025.
Q: Are you working independently in the power generation segment, or is it solely through the partnership with Hitachi?
A: While the partnership with Hitachi is significant, we are also pursuing other applications independently in the power generation segment. We have products deployed and expect this segment to grow, although it has been slow in transition.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.