Lamor Corporation Plc Company release 17 May 2022 at 09:00 a.m. EEST
Lamor Interim Report Release for Q1 2022: Record quarter - Revenue more than six times higher than in the comparison period
This release is a summary of Lamor’s Interim Report Release January–March 2022. The complete report is attached to this release as a pdf file. It is also available on the company website at investors.lamor.com.
January-March 2022 in brief
- Orders received increased 477.1 per cent to EUR 36.3 million (6.3)
- Revenue increased by 556.3% to EUR 43.2 million (6.6)
- EBITDA was EUR 5.9 million (-0.5)
- Adjusted EBITDA totalled EUR 7.9 million (-0.5) or 18.6% of revenue
- EBIT was EUR 4.5 million (-1.2)
- Adjusted EBIT amounted to EUR 6.5 million (-1.2) or 15.0% of revenue
- Net cash flow from operating activities was EUR -7.7 million (-1.0)
- Earnings per share increased to 0.07 euro (-0.06)
- Impairment losses from Russian business amounted to EUR 2.0 million
CEO Mika Pirneskoski
If the year 2021 was step changing for Lamor for order backlog growth, the first quarter of 2022 was step changing for revenue growth. The record revenue of the first quarter took us a step closer to our long-term financial targets. During the past nine months, the total revenue has been almost 80 million euros which corresponds to our long-term financial target for annualised revenue of over EUR 100 million. This is an important milestone for Lamor and a major step in our growth path.
Especially the significant environmental clean-up projects in Peru and Ecuador, the major service contracts in Kuwait and Saudi Arabia as well as the development of other business, increased Lamor’s revenue in the first quarter to 43 million euros. This is more than six times the volume of the comparison period.
The significant increase of business volume also increased the amount of working capital. Working capital growth is typical during environmental incident clean-up projects, where a sizeable amount of equipment and services are delivered during a short period of time. The importance of strengthened balance sheet, as a result of a successful IPO, was evident during the project in Peru which was one of the reasons we were able to take a significant role in the project. The role, however, at the same time increased our working capital temporarily. In addition, the project in Saudi Arabia also contributed to the working capital growth as the payment terms in the Middle East are typically long.
Environmental clean-up projects in Ecuador and Peru highlight the importance of the local presence
There was a significant environmental incident in one of Repsol’s terminals in Peru in January 2022. The local Lamor organisation consisted of less than 30 employees and most of our local equipment was allocated to other on-going service projects. An additional challenge was posed by a simultaneous environmental incident in Ecuador.
Our highly scalable business model allowed us to build an organisation of 800 people to clean-up the environmental incident. At the peak of the project, we had in Peru experts from Peru, Ecuador, Spain, Finland, and the US. Organising global logistics during these challenging times required significant efforts from the whole organisation.
This is a great achievement from the whole organisation and a clear indication that Lamor’s strategy - being globally local - is really working. Our strategy is based on having a sufficient global business presence combined with adequate local resources to be able to offer our solutions in clients’ operating environment yet fulfilling international quality standards.
Strategic targets and transformation
As per our financial guidance, we estimate that the year 2022 will be significant from revenue and profitability growth perspective. Lamor has been growth-oriented for a long time, and we have invested significantly in resources that have enabled the growth in the order backlog.
Over the past three quarters we have also invested significantly in improving our project execution and financial control capabilities. The next phase of the transformation is to bring more economic accountability to different levels of the organisation and to unify our offering and processes on a global level.
Sustainability is the core of all our activities, and it is our strong belief that being a sustainable company will create a permanent competitive advantage to us and allow us to differentiate especially from our local competitors. One of our targets in sustainability is to develop a life cycle assessment framework for our offering. The aim of the model is to combine sustainability data with financial and operational data and to demonstrate what is the net impact of our solutions in our clients’ business.
Focus on future growth
We have strengthened our management team significantly over the past year. We have recruited four new people with strong expertise in their respective fields. In addition, we have been successful in strengthening the rest of the organisation, and to succeed with our growth targets, these efforts will continue also in 2022.
The efforts to reach our strategic targets will continue. We will continue the work in taking our full solution portfolio to our clients in all our current market areas. Currently, the focus is on South America and the Middle East. Our structured efforts to consolidate circular economy solutions with all our products and services will continue. Finally, we are also working hard to improve our capabilities to measure our operative efficiency and our ability to react to changes in the working environment as early as possible.
Russia's invasion against Ukraine affects our business environment. Due to the war, we have ceased the sales activities of our products and services in Russia. The global cost inflation, as well as the shortage of raw materials and components, is having an effect also on our business. We continue to monitor the situation carefully.
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Positive profit warning 10 May 2022
Lamor raised its revenue and adjusted EBIT guidance for 2022. Lamor now estimates the revenue to be at least EUR 120 million and adjusted EBIT to be at least EUR 14 million for the full year 2022. Earlier the revenue was estimated to be at least EUR 110 million and adjusted EBIT to be at least EUR 12 million. Lamor published a company release regarding the change on 10 May 2022.
Raising the guidance of revenue and adjusted EBIT is related to, among others, environmental response and clean-up projects started at the beginning of 2022, which have turned out to be larger in scope and taking longer than expected.
Guidance for 2022
Lamor estimates its revenue to be at least 120 million for the full year 2022. Adjusted EBIT is estimated to be at least EUR 14 million.
Lamor has a strong order backlog for 2022. Since a significant part of the revenue is generated by large service project deliveries, any major delay in the project progress would have a negative impact on revenue and profit for 2022.
Lamor closely follows how the Russian invasion of Ukraine is affecting the company’s operating environment. Due to the war, Lamor has ceased the sales activities of the products and services in Russia. War related global cost inflation as well as the shortage of raw materials and components are having an effect also on Lamor’s business. Lamor will continue to monitor the situation carefully.
In addition, any potential virus variant of the COVID-19 could have a negative impact on Lamor’s revenue and result in 2022 by impacting Lamor’s capabilities to deliver projects efficiently.
Webcast for shareholders, analysts, and media
Webcast for shareholders, analysts and media will be arranged on 17 May 2022 at 10:00 EEST. The result will be presented by CEO Mika Pirneskoski and CFO Timo Koponen. The webcast includes a Q&A session and participants can ask questions in English and Finnish via the event chat room. The webcast can be followed at lamor.videosync.fi/results-q1-2022.
A recording of the webcast will be available later on the company’s website at investors.lamor.com/reports-and-presentations.
Mika Pirneskoski, CEO, Lamor Corporation Plc, tel. +358 40 757 2151
Timo Koponen, CFO, Lamor Corporation Plc, tel. +358 40 749 2986
Danske Bank A/S, Finland Branch, tel. +358 50 590 7667
Lamor in brief
Lamor is one of the leading global providers of environmental solutions. Lamor provides its customers with equipment used for oil recovery, waste management and water treatment as well as versatile environmental solutions and services, such as clean-up and preparedness services related to oil spill response and oil spills, services for the treatment of waste and tailored and adapted water treatment solutions. Lamor operates together with its local partners, offering a wide selection of solutions, which can be tailored according to the needs of each customer, and aiming to clean the world, for which the company has worked since its incorporation. The company's share is listed on the Nasdaq First North Premier Growth Market Finland marketplace maintained by Nasdaq Helsinki under the trading code LAMOR. Further information: www.lamor.com
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