BTS GROUP AB (PUBL)
INTERIM REPORT JANUARY 1-SEPTEMBER 30, 2021
Earnings 20 percent higher than in 2019
January 1-September 30, 2021
- Net sales amounted to MSEK 1,346 (1,042). Adjusted for changes in foreign exchange rates, sales increased 40 percent.
- Operating profit (EBITA) increased to MSEK 238 (45). Excluding the forgiven PPP loan 188 (45).
- The operating margin (EBITA margin) was 17.7 (4.3) percent. Excluding the forgiven PPP loan 14.0 (4.3).
- Profit after tax increased to MSEK 156 (12). Excluding the forgiven PPP loan 106 (12).
- Earnings per share increased to SEK 8.08 (0.60). Excluding the forgiven PPP loan 5.51 (0.60).
- Our comparison year is 2019, since 2020 was an extraordinary year. Adjusted for changes in foreign exchange rates, net sales in the first nine months of the year increased 13 percent compared with 2019. Virtual deliveries mean that there are no expenses charged to revenue. The actual growth of the operations was approximately 18 percent.
- Compared with the nine-month period for 2019, operating profit (EBITA) increased by 20 percent and profit before tax by 13 percent, excluding the forgiven PPP loan.
Third quarter 2021
- Net sales amounted to MSEK 478 (347). Adjusted for changes in foreign exchange rates, sales increased 40 percent.
- Operating profit (EBITA) increased to MSEK 114 (21). Excluding the forgiven PPP loan 64 (21).
- The operating margin (EBITA margin) was 23.9 percent (6.0). Excluding the forgiven PPP loan 13.5 (6.0).
- Profit after tax increased to MSEK 85 (8). Excluding the forgiven PPP loan 36 (8).
- Earnings per share increased to SEK 4.42 (0.40). Excluding the forgiven PPP loan 1.85 (0.40).
- Our comparison year is 2019, since 2020 was an extraordinary year. Adjusted for changes in foreign exchange rates, net sales increased 15 percent. Virtual deliveries mean that there are no expenses charged to revenue. The actual growth of the operations was approximately 20 percent.
- Compared with the third quarter of 2019, operating profit (EBITA) increased 19 percent and profit before tax increased by 13 percent, excluding the forgiven PPP loan.
In May 2020, the US BTS subsidiary received federal COVID-19 support under the "Paycheck Protection Program" (known as
-
loans). In accordance with the guidelines from the US Authorities, this loan was written off during the third quarter of
2021 and had a positive impact of MSEK 49.7 on operating profit. For increased comparability, the outcome for 2021 is stated throughout this interim report both including and excluding the forgiven PPP loan.
Upgraded outlook for 2021
- The result - excluding the forgiven PPP loan - is expected to be significantly better than 2020 and significantly better than in 2019. This deviates from the previous report when the result was expected to be significantly better than 2020 and better than in 2019.
Q3
CEO COMMENTS
Record quarter
and improved outlook for 2021
We are delivering our best-ever third quarter. Our long-termstrategy for managing the
pandemic is working and we have taken our
company to a new level.
The pandemic has initiated significant changes to strategies and organizations in major com panies around the world, creating increased demand for our services. BTS is an even more attractive partner for our customers today, thanks to our head start in virtual services, our
continued investment in product development and the fact that we retained all of our employees during the past year.
A comparison with 2020 would be like an ice cream seller comparing sales to a rainy summer:
reporting better figures is a little too easy. This is why we ourselves make all our comparisons with 2019.
Our revenue for the first nine months of the year increased 13 percent compared with 2019. Virtual deliveries mean that there are no expenses charged to revenue. The actual growth of the operations was approximately 18 percent.
Despite strong currency headwinds, our oper ating profit increased 20 percent compared with 2019. Discounting currency effects, our earnings increased more than 30 percent.
It should be noted that the formally reported results are MSEK 49.7 higher than my descriptions above. This is due to the announcement by the US Authorities in the third quarter that they forgive that same amount in PPP loans (the Paycheck Protection Program), the purpose of which was to support us in 2020 owing to our retaining all our personnel. This is attributable to the events of 2020, which is why it can be said that our earnings were MSEK 49.7 higher in 2020 than we could report. In accordance with the IFRS reporting standards, which we in our stock exchange
contract have committed ourselves to follow, this must be reported in the business for 2021.
Our margin continued to improve: it increased approximately 2 percentage points compared with 2019, to 14 percent. The main reason for the improvement is more efficient resource usage, price optimization and reduced external costs, while increased digital investments were charged
to earnings. Our long-term goal remains to reach an EBITA margin of 15 percent.
Many of our customers have indicated that demand for physical deliveries will return when travel restrictions, and the limitations on meet ing others, are lifted and that they will demand a combination of physical, virtual and digital solutions. We believe that demand for digital solutions will increase and we will be investing significantly more in product development for digital solutions in 2021. Our goal is to meet our customers' evolving needs and to increase our licensing revenue.
In the third quarter we acquired Netmind, a specialist in digital transformation that operates primarily in Spain. They have an extremely robust offering. We believe there is great demand for their products and services globally, and we regard this as an extremely attractive opportunity for growth.
BTS's ambition is to exit the 2020 pandemic
and recession as a stronger company in the long term and to achieve a level of profit higher than prior to the recession, as well as sustainable growth. Our goal is to have larger and more profitable operations than before the pandemic
-
based on an expanded customer base, deeper customer relations, a stronger organization and increased revenue from virtual and digital solutions, combined with physical deliveries.
The outlook for 2021 is favorable; we believe that earnings - excluding the forgiven PPP loan -
will be significantlyhigher than 2020 and
significantlyhigher than in 2019, despite strong
currency headwinds compared to 2019.
Stockholm, November 10, 2021
Henrik Ekelund
President and CEO of BTS Group AB (publ)
2 | BTS Interim Report January 1-September 30, 2021
OPERATIONS
Sales
BTS's net sales for the nine-month period amounted to MSEK 1,346 (1,042). Adjusted for changes in foreign exchange rates, total sales increased 40 percent.
Growth varied between the units: BTS North America 51 percent, BTS Other markets 46 percent, APG 39 percent and BTS Europe 10 percent (growth measured in local currency).
Compared with the nine-month period in 2019, sales increased
13 percent, adjusted for changes in foreign exchange rates. It should be noted that the virtual deliveries meant no travel expenses were charged to customers, which is why the underlying growth in operations is approximately 5 percent higher.
Earnings
In May 2020, the US BTS subsidiary received federal COVID-19 support under the "Paycheck Protection Program" (known as PPP loans). In accordance with the guidelines from the US Authorities,
this loan was written off during the third quarter of 2021 and had a positive impact of MSEK 49.7 on operating profit. For increased comparability, the outcome for 2021 is stated throughout this interim report both including and excluding the forgiven PPP loan.
Operating profit (EBITA) increased during the nine-month period to MSEK 238 (45), excluding the forgiven PPP loan MSEK 188 (45). The operating margin (EBITA margin) was 17.7 (4.3) percent, excluding the forgiven PPP loan 14.0 percent (4.3).
Compared with the nine-month period for 2019, operating profit (EBITA), excluding the forgiven PPP loan, increased by 20 percent despite strong currency headwinds. Discounting changes in foreign exchange rates, our operating profit (EBITA), excluding the forgiven PPP loan, increased more than 30 percent. The oper ating margin (EBITA margin) increased from 11.9 to 14.0 percent, excluding the forgiven PPP loan.
Operating profit (EBIT) increased during the nine-month period to MSEK 215 (27), excluding the forgiven PPP loan MSEK 165 (27). The operating margin (EBIT margin) was 16.0 (2.6) per- cent, excluding the forgiven PPP loan 12.3 percent (2.6). Operating profit (EBIT) for the nine-month period was charged with MSEK
23.0 (18.3) for amortization of intangible assets attributable to acquisitions.
The Group's earnings before tax increased to MSEK 203 (17), excluding the forgiven PPP loan MSEK 154 (17).
REVENUE
BY QUARTER
600 | MSEK | |||
500 | ||||
400 | ||||
300 | ||||
200 | ||||
100 | ||||
0 | 17 18 19 20 21 | 17 18 19 20 21 | 17 18 19 20 21 | 17 18 19 20 |
Q1 | Q2 | Q3 | Q4 |
OPERATING PROFIT (EBITA)
BY QUARTER
100 | MSEK | |||
80 | ||||
60 | ||||
40 | ||||
20 | ||||
0 | 17 18 19 20 21 | 17 18 19 20 21 | 17 18 19 20 211) | 17 18 19 20 |
Q1 | Q2 | Q3 | Q4 |
- Excluding forgiven PPP loan.
NET SALES AND OPERATING PROFIT (EBITA)
ROLLING 12 MONTHS
2,000 | MSEK | MSEK | 250 | |||
1,600 | 200 | |||||
1,200 | 150 | |||||
800 | 100 | |||||
400 | 50 | |||||
0 | Q3 Q4 Q1 | Q2 Q3 Q4 Q1 | Q2 Q3 Q4 Q1 | Q2 Q3 Q4 Q1 | Q2 Q31) | 0 |
2018 | 2019 | 2020 | 2021 |
Net sales | Operating profit (EBITA) | |
- Excluding forgiven PPP loan.
PROFIT BEFORE TAX AND OPERATING MARGIN
(EBITA) BY QUARTER
100 | MSEK | % | 50 | |||
80 | 40 | |||||
60 | 30 | |||||
40 | 20 | |||||
20 | 10 | |||||
0 | Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 | Q2 Q3 Q4 Q1 | Q2 Q31) | 0 | ||
2018 | 2019 | 2020 | 2021 |
Profit before tax, MSEK | EBITA margin, % | |
- Excluding forgiven PPP loan.
BTS Interim Report January 1-September 30, 2021 | 3
The Group's profitability was positively affected by improved profit in all operating units compared with last year.
Third quarter
BTS's third-quarter net sales amounted to MSEK 478 (347). Adjusted for changes in foreign exchange rates, sales increased 40 percent.
Compared with the third quarter of 2019, sales increased 15 percent adjusted for changes in foreign exchange rates. It should be noted that the virtual deliveries meant no travel expenses were charged to customers, which is why the underlying growth in operations is approximately 5 percent higher.
In May 2020, the US BTS subsidiary received federal COVID-19 support under the "Paycheck Protection
Program" (known as PPP loans). In accordance with the guidelines from the US Authorities, this loan was written off during the third quarter of 2021, and had a positive impact of MSEK 49.7 on operating profit. For increased comparability, the outcome for 2021 is stated throughout this interim report both including and excluding the forgiven PPP loan.
SEGMENT REPORTING
The effects of IFRS 16 and the forgiven PPP loans are not included in the BTS Operating units reporting, which is why the effects are recognized as Group adjustments.
Operating units
BTS North America consists of BTS's operations in the USA, excluding APG but including SwissVBS with its operations in Canada and Switzerland.
NET SALES PER OPERATING UNIT
Operating profit (EBITA) increased during the third quarter to MSEK 114 (21), excluding the forgiven PPP loan MSEK 64 (21). The operating margin (EBITA margin) was 23.9 (6.0) percent, excluding the forgiven PPP loan 13.5 percent (6.0).
Compared with the third quarter of 2019, operating profit (EBITA), excluding the forgiven PPP loan increased by 19 percent. Currency fluctuations had a negative impact of 12 percent on earnings. The operating margin increased from 11.8 to 13.5 percent, excluding the forgiven PPP loan.
Operating profit (EBIT) increased to MSEK 106 (14), excluding the forgiven PPP loan MSEK 56 (14). The
operating margin (EBIT margin) was 22.2 (4.2) percent, excluding the forgiven PPP loan 11.8 percent (4.2). Operating profit for the third quarter was charged with MSEK 8.0 (6.3) for amortization of intangible assets attributable toacquisitions.
Profit before tax increased during the third quarter to MSEK 102 (11), excluding the forgiven PPP loan MSEK 52 (11). The Group's profitability was positively affected by drastically improved profit in all operating units compared
with last year.
BTS Europe consists of operations in France, Germany, the Netherlands, the UK and Sweden.
BTS Other markets consists of operations in Argentina, Australia, Brazil, China, Costa Rica, India, Italy, Japan, Malaysia, Mexico, Singapore, South Africa, South Korea, Spain, Taiwan, Thailand and the United Arab Emirates.
APG consists of operations in Advantage Performance Group in the USA.
Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Oct-Sep | Jan-Dec | ||
MSEK | 2021 | 2020 | 2021 | 2020 | 2020/21 | 2020 | |
BTS North America | 251 | 156 | 699 | 514 | 875 | 689 | |
BTS Europe | 77 | 76 | 240 | 224 | 332 | 316 | |
BTS Other markets | 124 | 93 | 327 | 240 | 451 | 363 | |
APG | 27 | 22 | 80 | 64 | 111 | 95 | |
Total | 478 | 347 | 1,346 | 1,042 | 1,769 | 1,464 | |
OPERATING PROFIT (EBITA) PER OPERATING UNIT | |||||||
Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Oct-Sep | Jan-Dec | ||
MSEK | 2021 | 2020 | 2021 | 2020 | 2020/21 | 2020 | |
BTS North America | 37.6 | 7.0 | 106.5 | 37.1 | 118.2 | 48.8 | |
BTS Europe | 6.3 | 3.0 | 30.9 | 10.7 | 39.7 | 19.5 | |
BTS Other markets | 18.9 | 9.8 | 46.2 | -3.2 | 68.9 | 19.4 | |
APG | 0.3 | -0.7 | 0.6 | -3.8 | 1.4 | -2.9 | |
EBITA per operating unit | 63.1 | 19.2 | 184.2 | 40.8 | 228.2 | 84.8 | |
Effects of IFRS 16 | 1.4 | 1.5 | 3.9 | 4.1 | 5.3 | 5.5 | |
Forgiven PPP loan | 49.7 | - | 49.7 | - | 49.7 | - | |
Total | 114.2 | 20.8 | 237.8 | 44.9 | 283.2 | 90.3 | |
4 | BTS Interim Report January 1-September 30, 2021
NET SALES BY SOURCE OF REVENUE JANUARY 1-SEPTEMBER 30, 2021 (2020)
Other revenue
Licenses 0 (2)% 11 (14)%
Programs 64 (48)%
Development 25 (36)%
NET SALES PER OPERATING UNIT
JANUARY 1-SEPTEMBER 30, 2021 (2020)
APG 6 (6)%
BTS North America 52 (49)%
BTS Other markets 24 (23)%
BTS Europe 18 (22)%
Market development
The market performed positively during the nine-month period. The pandemic initiated significant changes to strategies and organizations in many companies, creating increased demand for our services. Virtual deliveries are now fully accepted as a replacement for physical deliveries.
BTS North America
Net sales for BTS's operations in North America amounted to MSEK 699 (514) for the nine-month period. Adjusted for changes in foreign exchange rates, revenue grew 51 percent. Operating profit (EBITA) for the nine-month period totaled MSEK 106.5 (37.1). The operating margin (EBITA margin) was 15.2 (7.2) percent.
Compared with the nine-month period in 2019, net sales adjusted for changes in foreign exchange rates increased 22 percent and operating profit (EBITA) in SEK increased 23 percent.
Net sales for the third quarter amounted to MSEK 251 (156). Adjusted for changes in foreign exchange rates, revenue grew by 65 percent. Operating profit (EBITA) amounted to MSEK 37.6 (7.0) in the third quarter. The
operating margin (EBITA margin) was 15.0 (4.5) percent. Compared with the third quarter of 2019, net sales, adjusted for changes in foreign exchange rates, increased 24 percent and operating profit (EBITA) increased 28 percent
in SEK.
The market in North America has developed positively and BTS has been extremely successful with sales and deliveries of virtual services. The margin improved due to more efficient resource usage, price optimization and lower external costs.
BTS Europe
Net sales for BTS Europe amounted to MSEK 240 (224) for the nine-month period. Adjusted for changes in foreign exchange rates, revenue grew 10 percent. Operating profit (EBITA) for the nine-month period totaled MSEK 30.9 (10.7). The operating margin (EBITA margin) was 12.9 (4.8) percent.
Compared with the nine-month period in 2019, net sales, adjusted for changes in foreign exchange rates, decreased 5 percent and operating profit (EBITA) decreased 8 percent in SEK.
Net sales for the third quarter amounted to MSEK 77 (76). Adjusted for changes in foreign exchange rates,
revenue remained unchanged. Operating profit (EBITA) amounted to MSEK 6.3 (3.0) in the third quarter. The operating margin (EBITA margin) was 8.2 (4.0) percent.
Compared with the third quarter of 2019, net sales, adjusted for changes in foreign exchange rates, decreased 18 percent and operating profit (EBITA) decreased 56
percent in SEK.
The negative trend in BTS Europe can be attributed entirely to a drastic reduction of revenue in BTS Germany due to the completion of two major projects during the second quarter. We believe that the operation in Germany will stabilize and grow again starting in 2022.
BTS Other markets
Net sales for BTS Other markets amounted to MSEK 327
-
for the nine-month period. Adjusted for changes in foreign exchange rates, revenue grew 46 percent. Oper ating profit (EBITA) for the nine-month period amounted to MSEK 46.2 (-3.2). The operating margin (EBITA margin) was 14.1 (-1.4) percent.
Compared with the nine-month period in 2019, net sales, adjusted for changes in foreign exchange rates, increased 10 percent and operating profit (EBITA) increased 39 percent in SEK.
Net sales for the third quarter amounted to MSEK
124 (93). Adjusted for changes in foreign exchange rates, revenue grew by 35 percent. Operating profit (EBITA) amounted to MSEK 18.9 (9.8) in the third quarter. The operating margin (EBITA margin) was 15.3 (10.5) percent.
Compared with the third quarter of 2019, net sales, adjusted for changes in foreign exchange rates, increased 23 percent and operating profit (EBITA) increased 93
percent in SEK.
BTS Other markets was hit the first and the hardest by the pandemic during the first half of 2020 but is now showing a positive revenue trend for the last five quarters. The margin improved due to more efficient resource usage, price optimization and lower external costs.
APG
Net sales for APG amounted to MSEK 80 (64) in the nine -month period. Adjusted for changes in foreign exchange rates, revenue grew 39 percent. Operating
profit (EBITA) for the nine-month period amounted to MSEK 0.6 (-3.8). The operating margin (EBITA margin) was 0.7 (-5.9) percent.
Compared with the nine-month period in 2019, net sales, adjusted for changes in foreign exchange rates, increased 8 percent and operating profit (EBITA) increased from MSEK 0.0 to 0.6.
BTS Interim Report January 1-September 30, 2021 | 5
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BTS Group AB published this content on 10 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 November 2021 08:04:02 UTC.