Teleste Corporation interim report 1 January to 30 September 2024

Teleste Corporation
Stock exchange release
November 6, 2024 at 8.30 a.m. EET

TELESTE CORPORATION INTERIM REPORT 1 JANUARY TO 30 SEPTEMBER 2024
TELESTE CORPORATION: OPERATING PROFIT INCREASED DESPITE REVENUE DECLINE. DELIVERIES IN NORTH AMERICA ON THE RISE, LOW DEMAND IN EUROPE. CASH FLOW AT A GOOD LEVEL.

Unless otherwise specified, the figures in brackets refer to the year-on-year comparison period.

July-September 2024 in brief

• Net sales decreased by 15.1%, amounting to EUR 29.9 (35.2) million
• Adjusted EBITDA increased by 41.2%, amounting to EUR 2.7 (1.9) million
• Adjusted operating result increased by 183.4%, amounting to EUR 1.5 (0.5) million
• Operating result increased by 160.4%, amounting to EUR 1.3 (0.5) million
• Adjusted earnings per share increased by 72.3%, amounting to EUR 0.05 (0.03)
• Earnings per share increased to EUR 0.04 (0.03)
• Cash flow from operations increased by 277.1% to EUR 3.5 (0.9) million
• Orders received decreased by 32.5% to EUR 31.3 (46.4) million

January-September 2024 in brief

• Net sales decreased by 20.4%, amounting to EUR 96.0 (120.7) million
• Adjusted EBITDA increased by 2.8%, amounting to EUR 7.1 (6.9) million
• Adjusted operating result increased by 24.7%, amounting to EUR 3.2 (2.6) million
• Operating result decreased by 91.1%, amounting to EUR 0.2 (1.8) million
• Adjusted earnings per share decreased by 35.3%, amounting to EUR 0.12 (0.19)
• Earnings per share decreased to EUR -0.05 (0.15)
• Cash flow from operations decreased by 16.3%, amounting to EUR 10.6 (12.6) million
• Orders received decreased by 24.6% to EUR 88.6 (117.5) million
• The order book decreased by 8.1% and amounted to EUR 118.5 (129.0) million
• Teleste's 1.8GHz DOCSIS 4.0-compliant smart amplifiers are the first in the industry to be delivered to commercial networks in North America.

Outlook for 2024

In the updated guidance issued on 16 September 2024, the company estimates that the net sales in 2024 will amount to EUR 120-135 million and that the adjusted operating result in 2024 will be EUR 1-4 million.

Segment reporting

As the company announced on 25 April 2024, Teleste reports its key financial figures according to a new segment structure starting from the first interim report of 2024. The operating segments are Broadband Networks and Public Safety and Mobility. The Group's reported segments correspond to the Group's operating segments. The Group's common functions are treated outside segment reporting.

Key figures

[][][][][]
EUR million  7-9  7-9 Change  1-9  1-9 2023 Change 1-12 2023
2024 2023 2024
Net sales 29.9 35.2 -15.1% 96.0 120.7 -20.4 % 151.3
Adjusted EBITDA 2.7 1.9 41.2% 7.1 6.9 2.8 % 7.2
[1)]
    Adjusted 9.0% 5.4 7.4% 5.7 % 4.8%
EBITDA, % [1)] %
Adjusted EBIT [1)] 1.5 0.5 183.4% 3.2 2.6 24.7% 1.2
    Adjusted EBIT, 4.9% 1.5% 3.3% 2.1% - 0.8%
% [1)]
EBIT 1.3 0.5 160.4% 0.2 1.8 -91.1% -0.5
     EBIT, % 4.3 1.4% 0.2% 1.5% - -0.3%
%
Net result for the 0.6 0.3 66.1% -1.1 2.3 -146.0% -0.5
period
Adjusted earnings 0.05 0.03 72.3% 0.12 0.19 -35.3% 0.09
per share, EUR
[1)]
Earnings per 0.04 0.03 40.5% -0.05 0.15 -131.9% 0.00
share, EUR
Cash flow from 3.5 0.9 277.1% 10.6 12.6 -16.3% 10.8
operations
Orders received 31.3 46.4 -32.5% 88.6 117.5 -24.6% 149.6
Order backlog 118.5 129.0 -8.1% 125.9
Net gearing, % 44% 43% 52%
Equity ratio, % 46% 48% 45%
Personnel at 642 789 -18.6% 750
period-end

[1)] An alternative performance measure defined in the tables section of the report.

Comments by President & CEO Esa Harju:

"Profitability improved in both business units, although orders and revenue decreased compared to the same period last year. The savings measures and prioritizations implemented in the company have been significant, resulting in a substantially lighter cost structure than before. The cash flow from operations was also at a very good level.

In the Broadband Networks business unit, the European market demand continued at a low level. It appears, however, that the market decline has now slowed down. There are now initial indications that investments in the next-generation DOCSIS 4.0 technology are commencing in parts of Europe in the latter half of 2025. Delivery volumes in North America continue on the rise. They will however not fully compensate for the reduced volume in Europe this year. We are solidifying our position as a key technology supplier to several North American operators, and volumes are expected to continue to increase during 2025 and 2026. The rise may involve seasonal variations depending on the timing of orders and deliveries.

In the Public Safety and Mobility business unit, several important projects have advanced to the commercialization stage, and large project deliveries are scheduled for the end of the year. The largest project volumes are still for train manufacturers, but we are also advancing new projects in the area of video security. The share of services and maintenance business is growing, which will provide stabilizing volumes for future project cycles. The improvement in business profitability is progressing as planned.

We announced on August 30, 2024, that we have signed a €53 million secured syndicated financing agreement with our three partner banks. The financing agreement is for two years and includes two one-year extension options. The financing arrangement supports the implementation of our strategy.

We updated our financial guidance in a stock exchange release on September 16, 2024. The main reason for the update was that the European market demand in the Broadband Networks business has continued at a lower level and longer than anticipated.

We have continued determined actions to improve cost efficiency and to prioritize operations. The savings measures have affected all company operations. The restructuring of the group's legal structure, whereby the Broadband Networks and Public Safety and Mobility businesses are carved out into their own legal entities, will be completed by the end of this year."
 

For further information, please contact:

Esa Harju
President and CEO

Mervi Kerkelä-Hiltunen
CFO

tel. +358 2 2605 611

investor.relations@teleste.com

Teleste in brief
Teleste's technologies and products are used to build a networked society. Our solutions bring high-speed broadband and television services to homes, secure your safety in public places and guide you in the use of public transport. With solid industry experience and a drive to innovate, we are a leading international company in broadband, security and information technologies and related services. We work in close cooperation with our customers, both virtually and through our worldwide sales network. In 2023, Teleste's net sales reached EUR 151.3 million and on average it had approximately 800 employees. Teleste is listed on Nasdaq Helsinki.