Interim Report January 1 – September 30, 2019

ChromoGenics acquires own sputtering capacity and strengthens the company’s strategy to have stable and quality-assured production of sputtered film for dynamic glass

Third quarter of 2019

  • Net sales for the period amounted to SEK 14.0 (0.0) million and earnings to SEK -20.0 (-12.5) million, which corresponds to earnings per share of SEK -0.07 (-0.30). Deliveries of backlogged customer orders for dynamic products were delayed during the quarter, which has meant that net sales have been postponed.
  • Gross profit amounted to SEK -4.9 million, which is a decrease of SEK -0.6 million compared to the corresponding period in 2018 and SEK -3.5 million compared to Q2 2019. Increased costs for materials and inputs had a negative impact.
  • Cash and cash equivalents amounted to SEK 48.2 (29.2) million on September 30.
  • The preferential share issue in July to finance acquisitions of sputtering machines was oversubscribed at 180 percent. The new share issue brought in a capital contribution of SEK 86.4 million.
  • The extraordinary general meeting on August 7, 2019, resolved to conduct a directed share issue of SEK 10.0 million to two investors at a subscription price of SEK 0.53. The extraordinary general meeting furthermore resolved to adopt new by-laws in which the limits for the number of shares in the company and the company’s share capital were amended.
  • On August 19, 2019, the Board of Directors, pursuant to authorization granted by the extraordinary general meeting, decided to conduct a new directed share issue at a subscription price of SEK 0.50 through the set-off of claims totaling approximately SEK 5.5 million for guarantee compensation to guarantors in conjunction with the preferential share issue.
  • On September 30, the first of two sputtering machines was lifted into place in the new premises in Uppsala with the purpose to secure own sputtering capacity that will reduce ChromoGenics’ production costs.    
  • Order intake amounted to SEK 3.1 million during the third quarter. The total quote stock amounts to approximately SEK 350 million on the reporting date. Order volume going into Q4 2019 amounts to SEK 16.9 million, which indicates the continued positive and growing customer interest in ChromoGenics’ products.
  • ChromoGenics is participating in the R&D program Switch2Save within Horizon 2020 that is being financed by the EU. ChromoGenics’ share is EUR 1,035,000.

 

  2019 2018   2019 2018   2018
SEK million Jul-Sep Jul-Sep   Jan-Sep Jan-Sep   Jan-Dec
Net sales 14,0 0,0   37,2 4,4   11,2
EBITDA -17,4 -10,8   -46,6 -45,6   -66,5
Net income -20,0 -12,5   -54,8 -50,5   -73,4
Earning per share , SEK -0,07 -0,30   -0,32 -1,34   -1,83
Cash and cash equivalents at end of    the period 48,2 12,5   48,2 12,5   7,5

 

Events after the end of the period

  • Three orders totaling SEK 1.4 million from Vasakronan were received in October.
  • On November 15, the Board of Directors convened an extraordinary general meeting to be held on December 18 to enable and create preparedness for future long-term financing of ChromoGenics.

 

Installation in own production resources progresses according to plan

Comments from the CEO

ChromoGenics’ success is based on customers’ belief in our pioneering work and unique offer within performance glass for buildings. Our product categories are dynamic glass that alters its coloring depending on the solar radiation, static glass with built-in solar protection, and design panel glass with integrated solar panels. The products are marketed under the name ConverLight®. We create through our business idea and total facade concept, conditions for more climate-friendly and attractive buildings through improved indoor climate, improved energy performance, and an increase in property value.

During the third quarter, we successfully conducted a preferential share issue, bringing in net SEK 66.7 million. It was oversubscribed at 180 percent. The main objective of the new issue was to finance the acquisition of two sputtering machines and two smaller research machines for sputtering. This strengthened the company’s capital significantly. Particularly important is that this investment provides ChromoGenics with its own primary sputtering capacity with qualified machines. The idea is for the current external supplier of sputtered film to function as a second source. We are thereby creating a stable industrial structure with a focus on delivery of laminated performance glass. On September 30, the first sputtering machine, weighing in at around 130 tons, was brought in through the roof and placed in its spot at Söderforsgatan in Uppsala.

The assembly process runs according to plan with a view of final production of sputter electrochromic film during the first quarter of 2020.

This is the basis of ChromoGenics’ dynamic products. The entire production process and the dynamic products become significantly more sustainable from an environmental perspective. The acquisition of own sputtering machines will enable ChromoGenics to control the entire production process, which creates conditions to develop into the natural first choice of the central component in the dynamic glass of the future.

The unique aspect of ChromoGenics is its business idea to produce and deliver dynamic film to various production units/glass producers for installation into and delivery of final glass products to end customers. Rigorous process and quality control and an own production capacity enables quick international expansion.

The past spring and summer demonstrated the risk of not having control over the entire production process and further confirmed the need to ensure this key function. It was determined that the delivery problems were due to the current supplier’s insufficient process control combined with the alteration of a machine. Their production has now been upgraded and improved process controls have been implemented. Our assessment is that our supplier of sputtered film now has resolved their production problems.

In mid-September, we were therefore forced to communicate to the market that the quality problems with incoming material and delay income of around SEK 30 million in 2019 compared to the original target. This also affected our new sales of dynamic products within our ConverLight® product range. 

ChromoGenics is participating in the Switch2Save project that has a total grant amount of EUR 5,468,000 from the EU research and innovation program Horizon 2020. ChromoGenics will receive EUR 1,035,000. The aim of the project is to combine the most advanced electrochromic and thermocromic materials to manufacture lightweight, hybrid-enabled switchable optical systems.

We are pursuing our vision of being able to achieve in the next few years annual deliveries of ConverLight® of at least 100,000 sqm of sputtered film. We are working methodically to achieve this goal and taking the actions necessary to improve the products and gradually upscale the production and sales capacity.

We also started a long-term sustainability project within the company to further strengthen our environmental profile. We are seeing greater acceptance for our dynamic solution, and we now have a strong focus on sales in 2020.

Jerker Lundgren, CEO

Contact:

Jerker Lundgren, CEO
Lars Ericsson, CFO and Head of Communications
Tel: +46 (0) 18 430 04 30
E-mail: info@chromogenics.com

 

This information constitutes such information that ChromoGenics AB (publ) is obligated to disclose in accordance with the EU Market Abuse Regulation. The information was submitted by the above-mentioned contact persons for publication on 22 November 2019, at 08:30 CET.

 

Every care has been taken in the translation of this document. In the event of discrepancies, the Swedish original will supersede the English translation.


About ChromoGenics

ChromoGenics offers dynamic glass with controllable heat- and light transmission and static glass with world leading performance. The company’s unique technology ConverLight® provides sustainable solar control for increased indoor comfort and energy efficiency. ConverLight also contributes to Green Building certifications. In 2016 the company started commercial sales to real estate projects in Scandinavia.

ChromoGenics is located in Uppsala, Sweden, and the technology is derived from the world leading research center at Ångström Laboratory at Uppsala University. The plant has been partly financed by a conditional loan from the Swedish Energy Agency. ChromoGenics share (CHRO) is listed on Nasdaq First North Growth Market with G&W Fondkommission as Certified Adviser e‑mail: ca@gwkapital.se, tel.: +46 (0) 8 503 000 50 http://www.chromogenics.com

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