Enersize Q3 2021 Company Brief

Enersize Oyj's Q3 company brief can be found on the company's website enersize.com. Below is a translation of selected parts of the Q3 2021 company brief originally published in Swedish on November 11, 2021, with title "Enersize offentliggör delårsrapport för tredje kvartalet 2021".

July – September 2021

  • Net sales for the third quarter 2021 amounted to EUR 67,310 (53,095).
  • Operating profit (EBIT) for the third quarter 2021 amounted to EUR -404,724 (-535,999).
  • Profit before appropriations and taxes for the third quarter 2021 amounted to EUR -460,600 (-684,238).
  • Average number of employees for the third quarter 2021 amounted to 11.5 (10.0).

January – September 2021

  • Net sales for the third quarter 2021 amounted to EUR 189,215 (142,380).
  • Operating profit (EBIT) for the third quarter 2021 amounted to EUR -1,319,866 (-1,241,105).
  • Profit before appropriations and taxes for the third quarter 2021 amounted to EUR -1,485,470 (-1,442,512).
  • Average number of employees for the third quarter 2021 amounted to 10.5 (9.0).

Significant events in 2021

Third quarter

  • Partnership Agreement is signed with South Korean Das Korea.
  • Enersize receives order from Morocco through local partner SCOPP Solutions.
  • Enersize starts with quarterly reporting.
  • The Board of Directors of Enersize announces intention to further streamline the company structure.

Significant events after the period

  • Enersize signs Letter of Intent regarding reverse takeover with TeraFactory.
  • Enersize in strategic collaboration with Sigma Industry Solutions.
  • The Extraordinary General Meeting on 5 November 2021 resolved on, according to the Board of Directors submitted proposal, a fully underwritten rights issue and a directed issue totaling approximately SEK 28 million.
  • Enersize receives two patent approvals in China.

Summary of the Group’s indicators

EUR 2021
Q3
2020
Q3
2021
Q1-Q3
2020
Q1-Q3
2020
Full year
Net sales 67,310 53,095 189,215 142,380 222,209
Gross margin, % 52 74* 60 60* 59*
Operating profit (EBIT) -404,724 -535,999 -1,319,866 -1,241,105 -1,856,189
EBIT margin, % Neg. Neg. Neg. Neg. Neg.
Profit before appropriations and taxes -460,600 -684,238 -1,485,470 -1,442,512 -2,180,835
Profit margin, % Neg. Neg. Neg. Neg. Neg.
Earnings per share before and after dilution -0.0020 -0.0029 -0.0064 -0.0062 -0.0094
Number of shares 233,773,853 232,637,459 233,773,853 232,637,459 233,202,425
Average number of shares 233,704,779 202,407,565 233,370,492 135,230,023 167,139,339
Equity ratio, % 27.2 82.0 27.2 82.0 77.5
Balance sheet total 1,797,022 3,047,676 1,797,022 3,047,676 2,296,683
Cash flow from operating activities -302,265 -839,604 -987,646 -1,340,615 -1 892 598
Average number of employees 11.5 10.0 10.5 9,0 9,0

*To increase comparability, consulting fees have been deducted from material and services when calculating the indicator since the consultant is now a permanent employee of the company.


CEO ANDERS SJÖGREN COMMENTS

It has been an intense quarter for Enersize. Among other things, a new business model has been launched. The company has switched to a model where programs are sold as a SaaS solution. Therefore, the sales organization has been adapted and now focuses on partner collaborations. The need for our solution continues to increase, and the work is to capitalize on the increased focus on energy savings that exist in the market.
Meet CEO Anders Sjögren, who is ready to take Enersize to the next level.

Enersize helps the manufacturing industry to make significant reductions in energy consumption and carbon footprint. This is done through Enersize's patented complete solution that effectively finds and eliminates energy leakage where industrial compressed air is used.

Describe the development during the third quarter?
We continue to work with the new business model where we have gone from selling entire system solutions directly to the customer to selling via partners a scalable solution as a SaaS subscription (Software-as-a-Service), which has a very short payback period for the customer and gives us recurring and predictable revenue. The scalability comes from the fact that we sell the software as a SaaS solution via strategic partners around the world.
In addition, we have recently entered into a strategically important collaboration with Sigma Industry Solutions, which will help us with the installation and maintenance of monitoring equipment, something that further contributes to a scalable process. Finally, I can also tell you that we have received two patents approved for the Chinese market, which bodes well for the future.

How have the sales gone? And what is the result for the third quarter?
We summarize net sales up to and including the third quarter to EUR 189,215 (142,380) and for the third quarter 67,310
(53 095) EUR. The increase is mainly due to the fact that we have entered into collaborations with new partners. One effect of switching to a SaaS model is that sales are built up more gradually as it is a subscription model – compared with as before when each order was larger but in the form of a non-recurring income.
Some examples of collaborations are Momentum Industrial AB in Sweden and SCOPP Solutions in Morocco. In Morocco, our solution has been tested at a steel plant with good results, Maghreb Steel, which has several compressed air systems in the plant. In other respects, we have had higher staff costs than planned due to the fact that we are rebuilding and reorganizing the organization, primarily marketing and sales, to adapt to the new business model and recruitment of new skills to be ready to scale up, an investment that has affected our results.

What have you seen for the results of the new business model and the change in the organization so far?
I am proud that we now have a much clearer identity and brand, and that our solid marketing work over the past year has meant that today we also present ourselves as a world-leading company is expected to do.

What does the market look like?
Our market is very large, as 10 percent of the global industry's total electricity production is used to produce compressed air. About half of this compressed air is wasted due to leakage and inefficient use. We estimate the total savings potential at more than SEK 1,000 billion. If you add the fact that energy optimization is not a one-time measure, but something you actively need to work on to maintain, there are good opportunities for many and long customer relationships.
Enersize cost-effective SaaS solution offers customers monitoring of compressed air systems to deal with new leakages on an ongoing basis, which in turn generates recurring revenue for us.

What happens next?
We will focus on continuing to work with marketing and sales, finance and development functions in Enersize. We are conducting a directed and rights issue starting on 12 November 2021 to raise SEK 28 million to obtain working capital that makes it possible to fully implement the new business model. In addition, we are working to bring in more partner companies for faster growth and the development of the second generation of our cloud-based software solution. We will launch an even better service that will provide additional added value for customers and create more stable and better earnings.

Anders Sjögren
CEO, Enersize

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