OXE Marine AB (publ) Interim report 1 July to 30 September 2023

OXE Marine AB (publ)

Third Quarter 2023

  • Consolidated Net turnover amounted to SEK 47.5 m (SEK 39.1 m).
  • Consolidated Gross Profit amounted to SEK 17.0 m (SEK 10.1 m) with a gross margin of 36% (26%).
  • Consolidated EBITDA amounted to SEK -10.2 m (SEK -8.0 m).
  • The consolidated result for the quarter amounted to SEK -17.6 m (SEK -20.1 m).
  • Consolidated EPS and Diluted EPS amounted to SEK -0.06 (SEK -0.08).

January - September 2023

  • Consolidated Net turnover amounted to SEK 126.6 m (SEK 116.3 m).
  • Consolidated Gross Profit amounted to SEK 25.3 m (SEK 28.7 m) with a gross margin of 20% (25%).
  • Consolidated EBITDA amounted to SEK -55.4 m (SEK -29.8 m).
  • The consolidated result for the period amounted to SEK -89.0 m (SEK -64.2 m).
  • Consolidated EPS and Diluted EPS amounted to SEK -0.29 (SEK -0.26).

Significant events during the third quarter

  • OXE Marine receives orders worth SEK 63 m (USD 5.8 m) to supply a United States Governmental Agency.
  • OXE Marine received an order from its exclusive distributor in the Philippines of approximately SEK 9 m (EUR 0.9 m) as a result of an award from the Philippines Coast Guard.
  • OXE Marine and Punch Torino announced a collaboration.
  • OXE Marine expands in North America by appointing new distributor in Mexico.

Significant events during the first half of the year

  • OXE Marine receives orders worth SEK12M (USD1.1M) from United States DLA.
  • OXE Marine presented a new concept outboard OXE hybrid 450, the world’s first diesel electric hybrid outboard.
  • OXE Marine's water jet engine was nominated for innovation of the year at the Miami international boat show.
  • OXE Marine expands in South America by appointing new distributors in Brazil and Colombia.
  • OXE Marine expand their footprint in Asia by appointing Creation Co., Ltd as dealers for Japan.
  • OXE Marine appointed Paul Frick as new CEO.
  • OXE Marine introduced the OXE configurator, that allows the customers to customize their OXE Diesel Outboard.

Significant events after the reporting period

  • OXE Marine announced a collaboration with control system manufacturer Uflex.

A word from the CEO

“The two large milestones achieved during the quarter is an accumulation of hard work over several years finally paying off. Greater visibility in the delivery pipeline brings stability to our business as well as giving us momentum to pursue new opportunities. Our full focus is on delivering on our commitments to customers.”

Most notably there where two large milestone orders to governmental end users received during the quarter. Individually, each order is significant. The USD 5.8m order received to supply a US Governmental Agency demonstrates the growing market acceptance of our product in the largest market. The order to supply our customer in the Philippines as a result of an 80-engine order from the Philippines Coast Guard demonstrates the ability to perform repeat business in volume, where the customer previously delivered a large fleet order to the Philippines Bureau of Customs. This was enabled through good cooperation with an emphasis on training, knowledge transfer and ensuring an availability of spare parts.

During the quarter we recognized revenue of approximately 20% of the order to supply a US Governmental Agency with further deliveries on the order relating to engines, spare parts & accessories, and containerised lifecycle support, planned to be carried out during the remainder of the year as well as the first half of 2024.

Financially it was also a milestone quarter with the highest ever gross margin achieved of 36%. The higher margin was attributable to the following factors: milestone orders consisting of engines and P&A, price increases coming into full effect and a larger proportion of P&A sales. This is an encouraging development, as it means that this has been the best performance in the underlying business during a quarter. While a large portion of the margin improvement is attributable to the milestone orders received, which includes engines and sufficient P&A to support the lifecycle of the product, excluding these orders there was still a general improvement in the underlying margin of the business.

Total sales amounted to SEK 47.5 m (SEK 39.1 m) on a consolidated basis. The large orders received during the quarter gives us some visibility in the coming quarters as we know already now on the planned delivery schedules of these projects, enabling production planning and delivery coordination.

Parts & Accessories contributed 25% (24%) of total revenue during the third quarter with sales amounting to SEK 11.7 m (SEK 9.5 m). The growth is mainly attributable to the increasing population of OXE outboards in the market. The majority of P&A related to the milestone orders is still to be delivered.

Costs were kept under control during the quarter and one of the main reasons has been the decrease in personnel costs of SEK 3.2 m relative to the same quarter previous year. The organisation is lean with a high focus on productivity. At the same time, we have increased the resources in our global technical service and support team and continue to focus on this part of the business to develop the aftermarket. Our aim is to consistently increase the knowledge of OXE products as well as the technical ability of the service network to carry out installations and service and maintenance work.

Following the launch of the “refurb program” mentioned in Q2, we sold the first remanufactured engines in Q3. These engines were quality checked in Sweden before being sold back into the market as remanufactured engines. The program is running as a full-time program with resources permanently allocated to it and is key to ensuring effective management of inventory levels as well as creating an aftermarket for OXE products.

We announced a collaboration with Punch Torino during the Genoa Boat Show. Punch has extensive knowledge of diesel engines and is on the forefront of the development of clean burning combustion engines. The first step in the collaboration is for PUNCH to perform certification and calibration work on the OXE200 family of engines, in order to adhere to the latest maritime emission requirements.

Finally, when analysing our own EBITDA performance (refer EBITDA excluding forex movements and one-off adjustments below) we can see that there is an improvement in the operating performance of the business. This is encouraging as we continue to work towards achieving profitability and this is a goal that resonates with the entire company who understands the importance of achieving this milestone. Once again, I would like to thank the dedication of my colleagues who remain extremely productive and hard working.

Paul Frick, CEO