Equity Research Svenska Aerogel, Q1 2024: Streamlining to reduce costs

Svenska Aerogel Holding AB’s sales in Q1 2024 came in lower than our expectations. Although sales fell below expectations, the Company’s initiation of a significant efficiency program in Q1 is a positive development, promising cost savings. Also, positive progress has been achieved regarding customer collaborations.

Weak sales in Q1 2024, but efficiency improvements to boost margins

In Q1 2024, Svenska Aerogel reported sales just above SEK 0.5 million, significantly lower than our projected SEK 1.5 million. Consequently, both EBITDA and EBIT fell well below our expectations due to the reduced turnover. EBITDA came in at minus SEK 8.9 million compared to our forecast of minus SEK 7.0 million, while EBIT was minus SEK 10.8 million against our forecast of minus SEK 9.0 million. This departure from the trend seen in Q4 2023, where sales and profitability aligned with our forecasts, did not carry over into Q1 2024. However, the company has recently initiated an efficiency program to generate savings of slightly over SEK 10 million over the next 12 months. This program impacts the entire cost structure, including the cost of goods sold, and is expected to yield improved margins, primarily from Q3 2024 onward.

So far in 2024, the Company has received a framework order for 3 tons of Quartzene® from the French distributor Novcoat. This order, scheduled for delivery throughout the year, is valued at 96.8 kEUR, equivalent to around SEK 1.1 million. Additionally, the Company has obtained two significant pilot orders: one from a leading player in the electric vehicle battery industry, set to integrate Quartzene® into their product by Q2 2024, and another from a new client in the process industry employing Quartzene® for thermal insulation. Together, these orders total approximately 700 kg of Quartzene®. Financially, the Company recently bolstered its position with a gross influx of approximately SEK 51 million from a recent rights issue, part of which was allocated to the early repayment of a SEK 10 million convertible loan. This repayment translates into reduced interest expenses. As of March 31, 2024, the Company held around SEK 27 million in cash.

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