Equity Research Enrad, Q1 2024: Sales higher than expected

Today, Friday 26 April, Enrad AB (“Enrad” or the “Company”) published its report for the first quarter of 2024. Below are our initial impressions of the results, including deviations from our forecasts.

• Net sales of approximately SEK 7.6 million were 159% higher than our forecast of approximately SEK 3 million. The forecast was based on a low order intake reported in the Q4 2023 report on 23 February 2024.
• Gross profit after purchases of goods and services was approximately SEK 4.3 million, compared with our estimate of just over SEK 1.6 million. The gross margin was 56% in the first quarter, which was in line with our forecast.
• Other external and personnel costs amounted to approximately SEK 1.7 million, compared with our forecast of SEK 1.1 million.
• Operating profit after depreciation was minus SEK 1.2 million, compared with our estimate of minus SEK 1.9 million.

On 25 April the company announced that its Norwegian subsidiary had received two orders for heat pump installations totaling SEK 5.3 million.

The Company’s cash and cash equivalents on 31 March 2024 amounted to approximately SEK 3.0 million, compared to SEK 6.4 million on 31 December 2023. Capital tied up in inventories amounted to SEK 20 million on 31 March 2024, of which SEK 8 million was pledged. Management is evaluating further options to secure working capital, but at the same time believes that the conditions are in place to continue operations during the remainder of 2024 without additional capital.

Our impression is that Enrad’s Q1 2024 report is strong, not least since heat pump sales in Sweden fell by 43% in Q1 2024. The company has recently launched its performance monitoring and forecasting service for units sold and delivered, which should strengthen its competitiveness in the Swedish, Norwegian, and Finnish markets.

We intend to release a full research update  of Enrad shortly.

Read our latest Research Update here

Disclaimer

Carlsquare AB, www.carlsquare.se, hereinafter referred to as Carlsquare, carries out activities within corporate finance and equity research and publishes, among other things, information on companies, including analyses. The information is based on sources that Carlsquare believes to be reliable. However, Carlsquare cannot guarantee the accuracy of the information. Nothing contained in the analysis should be construed as a recommendation or solicitation to invest in any financial instrument, option or the like. Opinions and conclusions expressed in the analysis are intended only for the recipient.

The content may not be copied, reproduced, or distributed to third parties without the written consent of Carlsquare. Carlsquare shall not be liable for any direct or indirect damage resulting from decisions taken based on the information contained in this analysis. Investments in financial instruments offer opportunities for capital appreciation and profits. All such investments also involve risks. Risks vary between different types of financial instruments and combinations thereof. Past performance should not be taken as an indication of future results.

The analysis is not directed at, and may not be distributed to, U.S. persons (as that term is defined in Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”)). The analysis is also not directed at any natural or legal person in any jurisdiction where the distribution of the analysis to such persons would constitute or risk a violation of any Swedish or foreign law or constitution.

The analysis is so-called Commissioned Research, where the analyzed company has signed an agreement with Carlsquare about the analysis coverage. The analyses are published on an ongoing basis during the contract period and for the usual fixed fee.

Carlsquare may or may not have a financial interest in what is the subject of this analysis. Carlsquare is committed to ensuring objectivity and independence and has established procedures for dealing with conflicts of interest.

The analysts Bertil Nilsson and Christopher Solbakke do not own and may not own shares in the company analyzed.