CTT : Presentation av delårsrapport 2020-09-30

OCTOBER 23, 2020

EARNINGS CONFERENCE CALL

CTT SYSTEMS AB

TORBJÖRN JOHANSSON		DANIEL EKSTRAND
CEO		CFO

2

Humidity Control in Aircraft

For a better climate - in the aircraft cabin and in the sky

De-Humidifiers

Humidifiers

3

Q3 2020A

4

Q3 2020 Highlights

Net Sales in-line with forecast - Lower as expected due to COVID-19

 Net Sales 38 MSEK (83) vs Forecast 38 - 42 MSEK 

• Aftermarket better than anticipated 
• Agreement with Camfil for new aircraft applications / integrated filter solutions Still profitable despite COVID-19

5

Q3 2020 Financials in short

Large COVID-19 impact - Sales more than halved

• Net Sales of 38 MSEK (83), down 54 % versus previous year
• Adj. Net Sales down 52 % versus previous year
• Operating Profit (EBIT) of 6 MSEK (39)
• EBIT Margin 17 % (47)
• EBIT Margin adjusted for AR/AP currency effect 15 % (41)
• EPS 0.40 SEK (2.31)
• Operational Cash Flow of -5 MSEK (35)

-84 %

-54 %

-83 %

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Q3 2020 Net Sales Bridge, YoY

• Adj. Organic growth -52 %
• Adj. FX Effect -2 %

-54 % Net Sales growth (-52 % adj.)

 Covid-19 hits hard on OEM & Aftermarket  Strong VIP quarter, unaffected by Covid-19

Not only effect from Covid-19

 Ceased ZD deliveries to 787 account for approx.

38.3	12 MSEK of the decline in OEM sales

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Q3 2020 Sales Mix

VIP remains strong in an overall negative Covid-19 environment

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Q3 2020 EBIT Profit Bridge

		Volume, price,
MSEK	Q319	mix and other	Currency	Q320	Change
Net Sales	83.4	-43.7	-1.3	38.3	-45.0
EBIT	38.8	-26.7	-5.7	6.4	-32.4
EBIT MARGIN	47%			17%

The EBIT decrease of 32.4 MSEK is explained by:

• Business related decrease of totally -26.7 MSEK - explained by lower volumes
• Currency (USD/SEK) headwind in sales and a negative currency effect from Accounts receivables/payables (-5.7 MSEK)

• Covid-19impact on CTT sales (31 MSEK)
• Ceased ZD-787 (12 MSEK)

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Q3 2020 Free Cash Flow

• Low sales levels main explanation for weaker cash flow
• Cash intensive VIP projects with invoicing late in project
• Inventory build up
• Investments in production - laser cutting machine

Financial Performance

	Q320	Q319
Earnings before tax reconsiled to cash	3.6	35.2
Paid tax	-5.2	-3.1
Change in operating net assets	-3.1	2.6
Operating Free Cash Flow	-4.7	34.7

Change in Cash

30.4

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Q3 2020 Order Intake & Backlog

 Order intake still on low levels due to Covid-19 effects	MSEK	Q319	Q320
 Decreased production rates at Airbus and Boeing
Order intake	71.6	13.0
 Backlog decreases to 48 MSEK (138)	Backlog	137.9	48.1
 Mainly a consequence of the low order intake	USD/SEK	9.80	8.99

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JAN-SEPA 2020

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Jan-Sep 2020 Financials in short

 Net Sales of 166 MSEK (271), down 39 % versus previous year	-39 %
 Adj. Net Sales down 37 % versus previous year
 Operating Profit (EBIT) of 39 MSEK (95)
 EBIT Margin 23 % (35)
 EPS 2.33 SEK (5.85)
 Operational Cash Flow of -9.7 MSEK (74.7)

-59 %

-60 %

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Jan-Sep 2020 Sales Mix

VIP remains strong in an overall negative Covid-19 environment

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Jan-Sep 2020 Free Cash Flow

• Low sales levels main explanation for weaker cash flow
• One time tax payment for FY2018 and FY2019 of 23 MSEK. Adjusted Cash Flow 13 MSEK (75)
• Cash intensive VIP projects with invoicing late in project
• Inventory build up

Financial Performance

	Acc Q3 2020	Acc Q3 2019
Earnings before tax reconsiled to cash	37.6	96
Paid tax	-38.5	-10.5
Change in operating net assets	-8.8	-10.9
Operating Free Cash Flow	-9.7	74.6

Change in Cash

40.1

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ROLLINGA4Q

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Rolling 4Q Financials in short

• Net Sales of 450 MSEK (365), down 32 % versus previous Rolling 4Q
• Operating Profit (EBIT) of 63 MSEK (120), down 47 %
• EBIT Margin 25 % (33)
• EPS 3.88 SEK (7.36), down 15 %
• Operational cash flow of 24 MSEK (94), down 74 %

-47 %

-32 %

-47 %

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OUTLOOKA

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Q420 Forecast

Uncertain if higher demand in the aftermarket leads to orders and sales this quarter due to lowering inventory (cash preservation measures at airlines)

• Net Sales forecasted to be 35 - 45 MSEK (84)

 Underlying demand in the aftermarket has
bottomed. Indicating higher sales (QoQ).
Uncertainty in inventories at airlines.
 OEM slightly lower vs Q3 due to	35-45
production rate adjustments

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MANAGING COVIDA -19 IMPACT

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COMMERCIAL AVIATION IN EARLY RECOVERY

Lead by short- and medium-haul flights in Asia / China

• Inter-continentaltraffic lagging - regional differences - still volatile
• Commercial flights: 58 % compared to 2019
• Recovery lead by short- and medium-haul traffic
• Long-haul(intercontinental) traffic is lagging
• Big differences between regions / continents due to pandemic epicenter
• In the US: Daily travelers passing TSA-checkpoints surpassed 1M for first time since March

2019

2020

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AFTERMARKET RECOVERY DRIVEN BY WIDEBODY FLEET TREND

	FH-787 (MONTHLY 2020 / 2019)
350 000						1000
300 000					900
				800
250 000						700
				600
200 000						500
150 000					400
					300
100 000					200
				100
50 000					0
0
JAN FEB MAR APR MAY JUN	JUL AUG SEP OCT NOV DEC
		2020		2019

• A total widebody fleet of 4600 aircraft at the end of 2019
• Old aircraft to be on ground the longest - many to be retired
• Approx. 1300 Boeing 787 / A350 aircraft

A350 and Boeing 787 has favorable size / range / economics

- likely to recover to 2019 levels sooner than total widebody fleet

Active 787 fleet trend

Parked

In-service

In-Service Parked

WIDEBODIES 2019 YE

6000

4000

2000

0

WIDEBODIES YE

	Other	widebody			787		A350
	models

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PROJECTS FOR FUTURE GROWTH - POWER TO INVEST

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MARKET DRIVERS

NEW DRIVERS IN COVID-19 ENVIRONMENT

HUMIDIFIER MARKET	DE-HUMIDIFIER MARKET
 COMFORT > WELLBEING	 COST SAVINGS > OPEX > FUEL >
	INFLIGHT AIR QUALITY	 SUSTAINABILITY > CO2
	WELLNESS > CONFIDENCE TO	 STAKEHOLDER REQUIREMENT >
	TRAVEL > SAFETY	BAIL-OUT

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BEST MID-TERM GROWTH OPPORTUNITIES

HUMIDIFIER ONBOARD

BOEING 787 IN BUSINESS CLASS

 Retrofit opportunity: 1,000 Boeing 787 aircraft

 Low cost: One (1) humidifier system for Business Class  OEM opportunity

• Large-cabin,long-range business jets - 50 - 100 a/c per year
• Long-range(10+ hours) - No humidification system available
• Bombardier Global 7500 / 8000 (and Gulfstream G700)

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