Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Asetek AS (FRA:A31, Financial) maintained a stable gross margin of 45% year-over-year despite a lower revenue base.
- The company expects the liquid cooling segment to remain profitable for the current year and beyond.
- Asetek AS is on track with its same-store business, projecting a revenue growth of 40% to 60% for the year.
- The company is investing in new product development and marketing to capitalize on future opportunities.
- Asetek AS has initiated cost reductions expected to save $3 million annually, with full effects anticipated by Q1 next year.
Negative Points
- Asetek AS faces a weaker than anticipated market rebound and increased price pressure in the liquid cooling market.
- The company expects a significant revenue decrease in the liquid cooling segment, between 35% and 40% for the year.
- Asetek AS is experiencing customer challenges, including a customer exiting the market and another facing liquidity constraints.
- The company is impacted by low-cost competitors from China, affecting its gross margins.
- Asetek AS anticipates entering 2025 with increased uncertainty due to market volatility and customer dual sourcing.
Q & A Highlights
Q: Is it reasonable to assume that your gross margin from same-store is about 65%?
A: It's not really a number we can comment on because it also depends a lot on whether it's sold by a reseller or directly on our website. If it's sold direct, then there's a debate about whether marketing costs should be included. So, no, I cannot really comment on that.
Q: Your two largest liquid cooling customers account for 35% and 20%, respectively. Are any of these customers the ones you mentioned in your report as having issues like leaving the market or reducing order volumes?
A: I can unfortunately not talk about the names of our customers.
Q: Please elaborate on your thoughts regarding the HQ. Are you considering a sale and leaseback, and how is the sublease arrangement progressing?
A: On the sale and leaseback, everything is on the table in terms of financing the building. However, the sale and leaseback market is not attractive right now due to interest rates. We would consider it when the market rebounds. As for subleasing, it's going very well, with almost everything leased out.
Q: Can you elaborate on the renegotiated terms of your credit line?
A: No, that's a matter between us and the banks. We also did not elaborate on them before we changed it.
Q: Do you still expect to move into the new domicile in Q3 2024?
A: Yes, by the end of September.
Q: How many employees are you in Denmark after your latest announced redundancy?
A: About 80.
Q: How do you expect the cost of acquisition of Sanitec to impact the development of same-stores?
A: As far as I understand, they have not acquired Sanitec at this point in time, so it's all speculation. If they do acquire them, it would not introduce a new competitor but rather maintain the current competitive landscape.
Q: Can you talk about the yield on the subletting you made?
A: Given that there's only one tenant in the new building, it wouldn't be prudent to discuss the final details of that contract. However, we believe we are renting out at an attractive level.
Q: How many square meters in the new facilities are related to production?
A: It's difficult to answer precisely as the facility has evolved more into a warehouse than a production site. My guess is around 5,000 square meters.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
