Bittium Corporation
Interim report (Q1 and Q3)
Bittium Corporation's Business Review January-September 2024
Bittium Corporation, Stock Exchange Release, October 18, 2024, at 8.00 am
(CEST+1)
Net sales, operating result and cash flow improved from last year. Order backlog
grew significantly.
As of January 1, 2024, Bittium Corporation has started segment-based financial
reporting. There are four reportable segments: the company's three business
segments; Defense & Security, Medical, and Engineering Services, and Group
Functions segment.
Unless otherwise mentioned, the figures in brackets refer to the corresponding
period in the previous year.
Summary July-September 2024
· Net sales were EUR 14.0 million (EUR 13.9 million), representing a 0.8
percent increase year-on-year.
· Product-based net sales were EUR 7.0 million (EUR 7.6 million), representing
50.1 percent of the total net sales (54.9 percent).
· Services-based net sales were EUR 7.0 million (EUR 6.3 million),
representing 49.9 percent of the total net sales (45.1 percent).
· Operating result was EUR -0.3 million (EUR -2.1 million), representing -2.0
percent of net sales (-14.9 percent).
· The result for the period was EUR -0.6 million, and earnings per share were
EUR -0.016 (result for the period EUR -2.4 million and earnings per share EUR
-0.066).
· Cash flow from operating activities was EUR 7.9 million (EUR 5.2 million).
· Net cash flow was EUR 5.9 million (EUR 2.9 million).
· Implementation of the strategy and measures to improve the profitability of
the company continued systematically.
Summary January-September 2024
· Net sales were EUR 52.0 million (EUR 49.5 million), representing a 4.9
percent increase year-on-year.
· Product-based net sales were EUR 29.6 million (EUR 29.0 million),
representing 57.0 percent of the total net sales (58.6 percent).
· Services-based net sales were EUR 22.3 million (EUR 20.5 million),
representing 43.0 percent of the total net sales (41.4 percent).
· Operating result was EUR 2.6 million (EUR -5.3 million), representing 5.1
percent of net sales (-10.7 percent).
· Result for the period was EUR 1.7 million, and earnings per share were EUR
0.048 (result for the period EUR -6.0 million and earnings per share EUR
-0.168).
· Cash flow from operating activities was EUR 10.8 million (EUR 0.6 million).
· Net cash flow was EUR 3.0 million (EUR -9.4 million).
· Order backlog was EUR 39.4 million (EUR 21.3 million)
· Personnel at the end of the period was 503 employees (604 employees).
Key Figures
GROUP (MEUR) 7-9/2024 7-9/2023 1-9/2024 1-9/2023 1-12/2023
3 months 3 months 9 months 9 months 12 months
NET SALES 14.0 13.9 52.0 49.5 75.2
Change of the net 0.8 % 0.8 % 4.9 % -9.7 % -8.8 %
sales, %
EBITDA 1.3 0.3 8.7 1.9 5.2
EBITDA, % of net sales 9.2 % 2.0 % 16.7 % 3.8 % 6.9 %
OPERATING PROFIT / LOSS -0.3 -2.1 2.6 -5.3 -4.3
Operating profit / -2.0 % -14.9 % 5.1 % -10.7 % -5.7 %
loss, % of net sales
RESULT OF THE PERIOD -0.6 -2.4 1.7 -6.0 -5.4
FROM CONTINUING
OPERATIONS
EARNINGS PER SHARE -0.016 -0.066 0.048 -0.168 -0.153
(EUR)
TOTAL R&D EXPENSES 2.8 3.9 10.6 15.1 20.2
R&D EXPENSES, % FROM 19.8 % 27.9 % 20.4 % 30.4 % 26.9 %
NET SALES
CAPITALIZED R&D 0.9 1.4 4.8 5.7 7.2
EXPENSES
NET CASH FROM OPERATING 7.9 5.2 10.8 0.6 1.2
ACTIVITIES
NET CASH FROM INVESTING -1.7 -1.4 -5.8 -6.1 -7.7
ACTIVITIES
NET CASH FROM FINANCING -0.3 -0.9 -2.0 -3.8 -4.2
ACTIVITIES
NET CHANGE IN CASH AND 5.9 2.9 3.0 -9.4 -10.7
CASH EQUIVALENTS
CASH AND OTHER LIQUID 11.4 9.7 11.4 9.7 8.3
ASSETS
NET GEARING (%) 10.0 % 12.2 % 10.0 % 12.2 % 13.2 %
EQUITY RATIO (%) 71.2 % 71.0 % 71.2 % 71.0 % 69.6 %
AVERAGE PERSONNEL 500 609 506 611 601
DURING THE PERIOD
PERSONNEL AT THE END OF 503 604 503 604 526
THE PERIOD
Bittium's CEO Johan Westermarck
The third quarter of the year realized as expected. Net sales were at the same
level as in the corresponding period last year totaling to EUR 14.0 million.
Operating result continued to improve as a result from the measures to improve
the efficiency and profitability. Net sales in January-September 2024 grew to
EUR 52.0 million. Operating result was EUR 2.6 million, which was a significant
improvement compared to the year before. In addition to the measures to improve
the efficiency and profitability, lower R&D investments effected the development
of the operating result. Order backlog grew significantly.
In the current strategy period, our goal is profitable growth. The world's
geopolitical situation has a positive effect on the development of demand in our
Defense & Security Business Segment, creating good growth opportunities in the
international tactical communications market. In the Medical Business Segment,
growth has been challenged by the slow progress of medical device approvals, and
in the Engineering Services Business Segment by the cost-saving pressures in the
operating environment.
Defense & Security Business Segment
Net sales of the Defense & Security Business Segment in the third quarter grew
by 44.0 percent from last year and was EUR 7.0 million. Operating result
improved and was EUR -0.3 million. Net sales in January-September 2024 grew by
38.4 percent from last year and was EUR 27.9 million. Operating profit was EUR
2.1 million, corresponding to 7.5 percent of the net sales. The growth of the
industry's demand and the increased number of product deliveries have affected
to the development of net sales during this current year. The timing of product
deliveries in the Defense business is substantial factor in the development of
the Business Segment's net sales causing variation between the quarters. Our
focus during the rest of the year will be on ensuring the product deliveries.
The order book improved significantly from the previous year.
Cooperation with the Finnish Defense Forces continued strong. Partnership
agreement negotiations progressed as planned, and the goal is to sign the
agreement during the current year. The partnership agreement covers management
system solutions used in all branches of defense, such as Bittium's tactical
communication system and related products. The agreement will provide a clear
framework for planned cooperation for the years 2025-2036.
In the international defense market, cooperation with our customers proceeded as
planned. We received new orders from our customers in Croatia and Estonia, among
others. The cooperation with the US customer Lockheed Martin continued, and the
consortium led by us signed another framework agreement with Lockheed Martin as
part of the indirect industrial cooperation for Finland's F-35 program. The
framework agreement concerns the development of the cyber situational awareness
of tactical networks.
Medical Business Segment
Net sales of the Medical Business Segment in the third quarter decreased by 22.8
percent from last year and was EUR 4.1 million. Operating result was EUR -0.5
million. Net sales in January-September 2024 decreased by 17.4 percent from last
year and was EUR 13.8 million. Operating result was EUR -0.2 million,
corresponding to -1.7 percent of the net sales. The decrease in net sales was
influenced by the slow progress of medical device approvals for new products and
product variants, thus challenging the increase of the sales. The order backlog
decreased from the previous year.
We have invested in strengthening the necessary regulatory expertise by
recruiting and using external experts. This has resulted in additional costs
totaling approximately to EUR 0.7 million for the company during the current
year.
A significant part of the sales of ECG measuring devices was accumulated from
the ECG measuring devices sold to our US customer Boston Scientific Cardiac
Diagnostics. The first commercial deliveries of the Bittium Respiro recording
device, which is used to detect sleep apnea, have been made. Respiro has a sales
license for the European market (MDR approval), but some European countries have
additional local requirements that have taken us longer time to respond than
expected. As part of the strategy work, we have continued market-related
research and will reevaluate the target market for Respiro products.
Engineering Services Business Segment
Net sales of the Engineering Services Business Segment in the third quarter
decreased by 21.2 percent from last year and was EUR 3.0 million. Operating
result was EUR 0.0 million. Net sales in January-September 2024 decreased by
19.1 percent from last year and was EUR 10.3 million. Operating profit was EUR
0.5 million, corresponding to 4.9 percent of the net sales. The decline in the
net sales was affected by the challenging market situation and the lower number
of chargeable R&D projects than in the comparison period. The order backlog
remained at the same level.
The market situation for winning new projects has continued to be challenging,
as cost-saving needs limit our customers' ability to start new R&D projects.
However, the cooperation with our long-term key customers continued to be good
and we succeeded to win new deals from the telecom market and the defense
industry. Since the number of R&D service projects is low, we have used the free
capacity of the Engineering Services Business Segment experts in the Defense &
Security Business Segment's projects. This opportunity to use experts across the
Business Segments and has kept the employment of the personnel at high level.
Simultaneously, the projects in the Defense & Security Business Segment have
benefitted from the extra resources and the projects are progressing well. The
market situation for R&D services is still challenging and we do not expect any
changes in demand this year.
Changing Bittium from a R&D house into a sales-oriented product company has been
the focus of the current year, and the work has progressed well. The commitment
of our personnel in the development of the operating methods has been an
essential part in implementing the changes. At this point, I would like to thank
our personnel for that. The systematic progress of the changes has made it
possible to turn our focus towards the next goal, creating the future growth.
Key Figures of the Reportable Segments
The key figures to be reported are net sales, EBITDA, EBITDA % of net sales,
operating result, operating result of net sales, R&D expenses, capitalized R&D
expenses, new orders and order backlog, and the number of personnel. The Group
Functions segment includes expenses related to group administration and listed
company administration, as well as to real estate rental operations.
In connection with the transition to segment reporting, the company has reviewed
and specified the definition and processing of order backlog in its customer
management system. The company's order backlog consists of the undelivered
portion of sales orders. In this report, the company has corrected the order
backlog key figures of the 2023 to reflect the calculation according to the new
process.
GROUP ORDER BACKLOG IN 2023 (MEUR) 1Q/23 2Q/23 3Q/23 4Q/23
Corrected order backlog 25.6 23.1 21.3 27.6
Previously reported order backlog 28.7 28.0 25.3 27.6
KEY FIGURES OF THE REPORTED SEGMENTS
DEFENSE & SECURITY 7-9/2024 7-9/2023 1-9/2024 1-9/2023 1-12/2023
BUSINESS SEGMENT, 3 months 3 months 9 months 9 months 12 months
MEUR
NET SALES 7.0 4.8 27.9 20.2 36.2
EBITDA 0.5 -1.1 5.4 -1.3 1.9
EBITDA, % of net 6.9 % -23.1 % 19.2 % -6.3 % 5.3 %
sales
OPERATING PROFIT / -0.3 -2.4 2.1 -5.2 -3.2
LOSS
Operating profit / -4.4 % -49.1 % 7.5 % -25.6 % -8.7 %
loss, % of net sales
R&D EXPENSES 1.2 1.9 5.2 8.0 10.8
Capitalized R&D -0.5 -0.9 -3.1 -4.0 -5.0
expenses
New orders 9.2 2.2 34.1 13.6 38.6
ORDER BACKLOG 27.6 8.5 27.6 8.5 17.5
PERSONNEL AT THE END 230 260 230 260 230
OF THE PERIOD
MEDICAL BUSINESS 7-9/2024 7-9/2023 1-9/2024 1-9/2023 1-12/2023
SEGMENT, MEUR 3 months 3 months 9 months 9 months 12 months
NET SALES 4.1 5.3 13.8 16.7 22.0
EBITDA -0.2 0.6 0.9 1.1 0.8
EBITDA, % of net -4.9 % 10.7 % 6.8 % 6.8 % 3.8 %
sales
OPERATING PROFIT / -0.5 0.1 -0.2 -0.1 -0.9
LOSS
Operating profit / -11.4 % 2.0 % -1.7 % -0.6 % -4.0 %
loss, % of net
sales
R&D EXPENSES 1.2 1.5 3.9 5.7 7.7
Capitalized R&D -0.3 -0.3 -1.3 -1.5 -1.9
expenses
New orders 4.1 6.7 13.9 19.6 23.1
ORDER BACKLOG 5.6 7.3 5.6 7.3 5.5
PERSONNEL AT THE 101 126 101 126 107
END OF THE PERIOD
ENGINEERING-SERVICES 7-9/2024 7-9/2023 1-9/2024 1-9/2023 1-12/2023
BUSINESS SEGMENT, 3 months 3 months 9 months 9 months 12 months
MEUR
NET SALES 3.0 3.8 10.3 12.7 17.0
EBITDA 0.0 0.6 0.5 1.4 1.7
EBITDA, % of net 1.3 % 16.6 % 5.0 % 10.9 % 9.8 %
sales
OPERATING PROFIT / 0.0 0.6 0.5 1.4 1.7
LOSS
Operating profit / 1.3 % 16.6 % 4.9 % 10.9 % 9.7 %
loss, % of net sales
R&D EXPENSES 0.1 0.1 0.4 0.2 0.3
Capitalized R&D 0.0 0.0 0.0 0.0 0.0
expenses
New orders 2.3 3.3 10.9 11.1 14.6
ORDER BACKLOG 6.2 5.5 6.2 5.5 4.7
PERSONNEL AT THE END 125 143 125 143 131
OF THE PERIOD
GROUP FUNCTIONS 7-9/2024 7-9/2023 1-9/2024 1-9/2023 1-12/2023
segment, MEUR 3 months 3 months 9 months 9 months 12 months
NET SALES 0.0 0.0 0.0 0.0 0.0
EBITDA 1.0 0.2 1.9 0.6 0.8
EBITDA, % of net
sales
OPERATING PROFIT / 0.5 -0.4 0.3 -1.4 -1.9
LOSS
Operating profit /
loss, % of net
sales
R&D EXPENSES 0.3 0.4 1.1 1.1 1.3
Capitalized R&D -0.1 -0.1 -0.4 -0.3 -0.4
expenses
New orders 47 75 47 75 59
Outlook for 2024 (unchanged)
Bittium expects the net sales in 2024 to be EUR 85 - 95 million (EUR 75.2
million in 2023) and the operating result to be EUR 7.0 - 9.5 million (operating
loss of EUR -4.3 million in 2023).
More information about Bittium's market outlook is presented on the company's
internet pages at www.bittium.com.
Risks and Uncertainties
Bittium has identified several business, market, and finance-related risk
factors and uncertainties that can affect the level of sales and profits. The
global geopolitical instability has caused various risks related to demand and
supply and increased uncertainty.
Further information on risks and uncertainties is presented at the company's
internet pages at www.bittium.com.
Oulu, Finland, October 18, 2024
Bittium Corporation
The Board of Directors
Further Information:
Johan Westermarck
CEO
Tel. +358 40 344 2789 (group communications)
Karoliina Malmi
Vice President, Communications & Sustainability
Tel. +358 40 344 2789
Distribution:
Nasdaq Helsinki
Main media
Bittium
Bittium specializes in the development of reliable, secure communications and
connectivity solutions leveraging its over 35-year legacy of expertise in
advanced radio communication technologies. Bittium provides innovative products
and services, customized solutions based on its product platforms, and R&D
services. Complementing its communications and connectivity solutions, Bittium
offers proven information security solutions for mobile devices and portable
computers. Bittium also provides healthcare technology products and services for
biosignal measuring in the areas of cardiology and neurophysiology. Net sales in
2023 were EUR 75.2 million and operating loss was EUR -4.3 million. Bittium is
listed on Nasdaq Helsinki. www.bittium.com