· Q2 revenue of $16.9 million compared with $23.2 million in Q2 2021
· Gross margin of 42%, level with Q2 2021
· Q2 EBITDA adjusted of $1.3 million, compared with $3.2 million in Q2 2021
· First-half 2022 revenue of $30.8 million, and EBITDA adjusted of $0.4
million
· SimSports revenue of $1.0 million in the first full quarter of sales
· Organizational rightsizing implemented to reduce operating costs and improve
efficiency
· Temporary shift of development resources to drive SimSports product
development
· Full year guidance temporarily suspended due to reduced visibility on
customer demand as rising inflation and interest rates add to a continued
uncertain and challenging business climate
Asetek reported second-quarter revenue of $16.9 million, compared with $23.2
million in the same period of 2021. First-half 2022 revenue was $30.8 million,
compared with $48.2 million in the same period of 2021. The change in both
periods mainly reflects fewer shipments of Gaming and Enthusiast products.
Gross margin was 42% for the second quarter and 40% in the first half of 2022
compared with 42% and 43% in the same periods of 2021. Second quarter margin
improved from the first quarter due to the mix of product shipments and reduced
cost prices. Margin for the first half was impacted by higher component costs
due to continued shortages, changes to exchange rates, increased shipping costs
from supply chain disruptions and changed product mix.
"We have taken steps to reduce costs and drive efficiencies in response to a
prolonged challenging business climate for the Gaming & Enthusiast business and
reduced short-term demand visibility amid rising inflation and interest rates,
as reflected in the recent suspension of our full-year guidance," said André
Sloth Eriksen, CEO and founder of Asetek.
"While the launch of our SimSports products has been impacted by the same
challenges combined with inability to meet early demand because of Chinese
lockdowns , we continue to receive strong feedback from the sim racing
community, reflected in incoming orders. We aim to widen our product program
with new launches in 2022 and 2023 and remain confident in the long-term growth
potential as gamers and enthusiasts continue to demand new, improved equipment
and experiences within traditional gaming and sim racing," Sloth Eriksen
continued.
Operating income was $0.1 million and adjusted EBITDA was $1.3 million in the
second quarter of 2022, compared with operating income of $1.9 million and
adjusted EBITDA of $3.2 million in the second quarter of 2021. First-half 2022
operating loss was $1.8 million and adjusted EBITDA was positive $0.4 million,
compared with operating income of $5.4 million and adjusted EBITDA of positive
$7.9 million in the same period of 2021.
At June 30, 2022, Asetek had working capital of $11.8 million, of which $11.4
million was cash and cash equivalents. Long-term debt totaled $1.1 million.
During the first half of 2022, the Company invested $7.0 million in property and
equipment, including development of a new headquarters facility, and $2.0
million in capitalized costs for the development of new products. The Company
drew $4.4 million on a construction credit line in the first half.
To reduce costs and drive efficiencies, the Company recently reduced headcount
with an expected annual cost reduction of $4 to $5 million with full effect
during the second half of 2022. Total reductions across all business lines
amount to 52 employees the past year.
OPERATIONS
The Company announced that both Asus and EVGA will integrate Asetek's high
performance liquid cooling technology into new products utilizing NVIDIA's
latest Ampere GPU architecture. ASUS' new ROG Strix LC GeForce RTX 3090 Ti OC
edition graphics card and EVGA's new GeForce RTX 3090 Ti FTW3 ULTRA HYBRID
GAMING graphics card each provide extreme performance and near-silent operation
for competitive gamers and enthusiasts.
In March, the Company began shipping orders for the first of its SimSports
products - Invicta Sim Racing Pedals, along with its RaceHub software for quick
and easy adjustments and calibration. This initial offering, which has received
highly positive reviews, provides competitive SimSports gamers with full
immersion and the feeling of a real racecar. In April, the Company introduced
its new high-performance Forte Throttle and Brake Pedal Set for immersive racing
at a lower price point. SimSports revenue totaled $1.0 million in the second
quarter of 2022.
During the quarter, the Company formed a collaboration with Formula One racer
Kevin Magnussen as a brand ambassador for Asetek SimSports. The Company also
announced a sponsorship agreement with GetSpeed Race Team, a top contender in
the 24-hour Nürburgring race.
OUTLOOK
The Company has temporarily shifted development resources from Gaming &
Enthusiast to drive SimSports product development with the aim to introduce new
products later in 2022.
Rising inflation and interest rates have recently added to the continued impact
of pandemic lockdowns, supply chain disturbances and general geo-political
tensions, delaying a normalization of the business climate. The effects are
reduced discretionary consumer spending with decreased demand for the Company's
Gaming & Enthusiast products. In addition, the Company is experiencing reduced
visibility, caused by significantly increased volatility, in the forecasts
provided by OEM customers for the second half of the year.
Due to the increased uncertainty, the Company has suspended its revenue and
operating income guidance for 2022, beyond that revenue and operating income
will likely be below previously communicated expectations. Previous guiding
framed a revenue development in the range between a 5% decrease and 15%
increase, and operating income in the range from -$1 to +$5 million. The Company
will resume guidance when it has a more certain basis for providing full-year
expectations.
Conference call and webcast today, Thursday, 11 August at 2:00 PM CEST
CEO André Sloth Eriksen, COO John Hamill and CFO Peter Dam Madsen will present
the Company's results at 2:00 PM CEST and invites investors, analysts and media
to join the presentation. The presentation is expected to last up to one hour,
including Q&A, and can be followed via live webcast or conference call.
Webcast - audio and slide presentation:
Please join the results webcast via the following link:
https://streams.eventcdn.net/asetek/2022q2
Conference call - audio only:
Please dial in 5-10 minutes prior using the phone numbers:
Denmark +45 3271 4988
Norway +47 2198 4292
United Kingdom +44 (0) 203 059 58 69
Germany +49 (0) 69 566 037000
United States of America +1 760 294 1674
Material:
The second quarter 2022 earnings release, the half-year report and presentation
will be made available online at www.asetek.com and www.newsweb.no, as well as
through news agencies. A recorded version of the presentation will be made
available at www.asetek.com approximately two hours after the presentation has
concluded.
Q&A:
The conference call lines will be opened for participants to ask question at the
end of the presentation. Questions can also be submitted through the online
webcast during the presentation.
For questions or further information, please contact:
CEO and Founder André S. Eriksen, +45 2125 7076, email: ceo@asetek.com
CFO Peter Dam Madsen, +45 2080 7200, email: investor.relations@asetek.com
About Asetek:
Asetek (ASTK.OL), a global leader in mechatronic innovation, is a Danish garage
-to-stock-exchange success story. Founded in 2000, Asetek established its
innovative position as the leading OEM developer and producer of the all-in-one
liquid cooler for all major PC & Enthusiast gaming brands. In 2013, Asetek went
public while expanding into energy-efficient and environmentally friendly
cooling solutions for data centers. In 2021, Asetek introduced its line of
products for next level immersive SimSports gaming experiences. Asetek is
headquartered in Denmark and has operations in China, Taiwan and the United
States.
This information is subject to the disclosure requirements pursuant to Section 5
-12 of the Norwegian Securities Trading Act.