u-blox reports H1 2021 financial results

H1 2021 Highlights

(All comparisons versus the prior-year period unless otherwise noted)

• Revenue of CHF 192.7 million compared to revenues of CHF 174.0 million, an increase of 10.8% (at constant exchange rates: 16.5%)
• Gross profit (adjusted) of CHF 89.9 million compared to CHF 79.4 million, an increase of 13.3%, and equivalent to an adjusted gross margin of 46.7% versus 45.6% in the prior year period, plus 110 bps
• EBITDA (adjusted) of CHF 28.7 million, compared to CHF 24.1 million
• EBIT (adjusted) of CHF 10.5 million, compared to CHF 13.2 million
• Net profit (adjusted) before minority interests of CHF 6.3 million, compared to CHF 4.7 million
• Cash flow from operating activities of CHF 43.0 million, compared to CHF 13.9 million
• Free cash flow of CHF 27.7 million, compared to CHF -21.9 million
• CHF 85.1 million of cash and cash equivalents at 30 June 2021, compared to CHF 93.9 million at year-end 2020
• Repayment of the 1.625% CHF 60 million bond maturing on 27 April 2021 in its entirety using existing cash and a bridge loan of CHF 25 million
• Acquisition of full ownership in the Sapcorda Joint Venture in March 2021, in line with the company’s strategic goal of driving global innovation and growth of GNSS augmentation services for high precision positioning

H1 2021 Product Announcements

The company announced the following product launches enhancing the expansion of solution capabilities across its entire platform:

• The ALEX-R5 is a unique miniature cellular module that integrates low power wide area (LPWA) connectivity and GNSS technology into an ultra-small system-in-package (SiP) form factor, making it a perfect fit for size constrained applications.
• The MAYA-W1 Wi-Fi and Bluetooth module is tailored to a wide range of fast-growing, future-oriented professional applications, such as power management, electric vehicle charging, tracking, telematics, and fleet management.
• The LEA-F9T and ZED-F9T GNSS timing modules and antenna solution makes it easy to develop high precisions solution for network and other time and frequency critical applications.
• In Services, we introduced CloudLocate, a service that offloads the position calculation from IoT devices into the cloud. CloudLocate is ideally suited for Industrial IoT tracking applications that must survive in the field for months or years without battery replacement and only need a few position updates per day. It is available through the u‑blox Thingstream IoT service delivery platform.

Financial Overview

For the first half of 2021, u-blox generated revenues of CHF 192.7 million, EBIT (adjusted) of CHF 10.5 million and EBITDA (adjusted) of CHF 28.7 million. Revenues in all regions were higher in H1 2021 compared to the same period last year, reflecting strong broad-based expansion of overall demand. In particular, the automotive and consumer end markets exhibited strong year-on-year growth. The weakened USD/CHF exchange rate had a negative growth impact of 5.7 %.

Bookings recovered strongly in all regions, and the pace of growth of the company’s orderbook is exceeding by far the current revenue growth rate. The components market has been oversold since the beginning of the year, with delivery lead times increasing to several months and quantities limited by supply constraints.

APAC revenues increased to CHF 73.9 million in H1 2021 from CHF 70.1 million in H1 2020 (5.4%) driven by strong business levels in Japan and Korea. Growth in APAC was tempered by relatively flat results in China due to supply constraints and as some countries continued to be impacted by COVID-19. Revenues benefitted from particularly strong demand from automotive, as well as steady demand for drones and wearable applications.

EMEA revenues increased to CHF 59.4 million in H1 2021 from CHF 51.7 million in H1 2020 (15.0%) primarily due to a resurgence of demand in automotive as compared to the same period last year, in addition to solid demand within infrastructure and consumer tracking applications. Industrial applications remained stagnant due to limited component supply and a higher comparison basis year-on-year.

AMEC revenues increased to CHF 59.9 million in H1 2020 from CHF 48.9 million in H1 2020 (22.4%) propelled by automotive, telematics, medical and wearable applications. AMEC benefitted from robust demand from the automotive market, industrial telematics, medical and consumer applications.

u-blox operates in two segments:

• Positioning and wireless products
  u-blox develops and sells chips and modules for positioning and wireless connectivity that are used in automotive, industrial and consumer applications. For H1 2021, revenue amounted to CHF 192.7 million compared to CHF 173.8 million in H1 2020.
   
• Wireless services
  u-blox also offers wireless communication technology services in terms of data services, reference designs and software. For H1 2021, revenue for wireless services reached CHF 17.5 million compared to CHF 16.7 million in H1 2020 (including intra group revenue).

Adjusted gross profit increased by 13.3% to CHF 89.9 million in H1 2021 from CHF 79.4 million in H1 2020, resulting in an adjusted gross profit margin of 46.7% (H1 2020: 45.6%). Gross margin benefitted from the scale impact of increased demand as well as favorable product mix during H1 2021 as compared to H1 2020.

Adjusted operating expenses, which include R&D, distribution and marketing and G&A expenses, totaled CHF 80.5 million for H1 2021, compared to CHF 66.7 million in H1 2020. As a percentage of revenue, operating expenses were 41.8% of revenue compared to 38.3% last year.

R&D expenses (adjusted) increased to CHF 52.3 million in H1 2021 compared to CHF 39.5 million during the same period in 2020. As a percentage of revenue, adjusted R&D expenses in H1 2021 were 27.1 % of revenue compared to 22.7% in H1 2020. R&D expenses increased due to lower capitalization, and higher amortization expense as a consequence of product launches. The company increased R&D efforts in developing more agile processes and in re-designing modules to components with better accessibility, all recorded as expensed.

Distribution and marketing expenses (adjusted) in H1 2021 were CHF 18.1 million compared to CHF 15.8 million in the previous year period. As a percentage of revenue distribution and marketing expenses (adjusted) were 9.4% in H1 2021 compared to 9.1% in H1 2020. Distribution and marketing expenses increased due to higher revenues which resulted in higher bonus accruals.

Finance costs of CHF 6.6 million (H1 2020: CHF 3.5 million) consisted primarily of interest payments for the two bonds, realized foreign currency losses and the net effect from full consolidation of Sapcorda GmbH. Share of loss of equity-accounted investees net of tax was CHF 1.5 million in H1 2021 (H1 2020: CHF 1.9 million).

Net profit (adjusted) before minority interests was CHF 6.3 million, compared to CHF 4.7 million last year.  Diluted EPS (adjusted) in H1 2021 was CHF 0.89 per share compared to CHF 0.67 per share in H1 2020.

Net cash generated from operating activities

u-blox strongly generated cash from operating activities of CHF 43.0 million through H1 2021, compared to CHF 13.9 million generated the previous year, due to higher contribution, positive cashflow from net working capital and tax repayments.

Investing Activities

Investments in property, plant and equipment and intangible assets totaled CHF 17.5 million for H1 2021, compared to CHF 22.7 million in H1 2020. Free cash flow was CHF 27.7 million, compared to CHF -21.9 million in H1 2020. 

Financial Position

At 30 June 2021, u-blox had a solid balance sheet with an equity ratio of 58.1%. Cash and cash equivalents totaled CHF 85.1 million as of 30 June 2021, compared to CHF 93.9 million as of 31 December 2020. The decrease in the cash balance reflects the repayment of the 1.625% CHF 60 million bond that was repaid on 27 April 2021.

Management Commentary

Thomas Seiler, u-blox Chief Executive Officer, commented, “We experienced good recovery of revenue and strong gross profit growth year-on-year driven by the expansion in demand across our business, and resulting in strong positive free cash-flow. The automotive industry, which last year was significantly negatively impacted by COVID due to business and production shutdowns, is now driving a surge in demand for automotive applications across all regions. Consumer markets were also very strong on a year-on-year basis, with wearables and tracking applications driving growth. Our industrial business compares to a relatively strong H1 2020 and, overall, generated stable performance year-on-year. Bookings continue to increase at a growing pace since the beginning of the year and our orderbook is now approximately seven times the amount recorded in summer 2020.”

“We are optimistic for the second half of 2021 and beyond. The supply constraints for components have created challenges that we need to continually manage. Longer-term, the deep-rooted demand supporting the growth of our business will continue, driven by widespread IoT adoption and the desire for connectivity throughout the world.”

Outlook

For the 2021 financial year, u-blox is further updating its guidance based on continued strong demand throughout, balanced by near-term uncertainties and challenges caused by supply constraints for components. Additionally, the company is anticipating additional costs related to the integration of the Sapcorda acquisition and efforts related to adapting certain products to align with component availability. The company is also expecting lower R&D capitalization in future periods in connection with implementing more agile product development models. The indications are made on the basis of the previous year average foreign exchange rates.

(in CHF millions)	Actual FY 2020 (adjusted)		Updated (adjusted) 1 June 2021	Updated (adjusted) 20 August 2021
Revenue	334	Revenue growth1	11…19%	15…19%
EBITDA	42	EBITDA margin	16…22%	16…20%
EBIT	18	EBIT margin	9…12%	6…9%

¹  Exchange rate assumptions for 2021: Average rate of 2020 (USD: 0.939, EUR: 1.075, GBP: 1.204)

 

Conference call and webcast details

Thomas Seiler, CEO, and Roland Jud, CFO, will host a conference call and webcast with analysts and investors Friday, 20 August, at 2:30 PM CET.

To participate, please dial the following number approximately 10 minutes prior to the start of the call:

Switzerland / Europe:	+41 (0) 58 310 50 00
United Kingdom:	+44 (0) 207 107 06 13
United States:	+1 (1) 631 570 56 13

Webcast Participants’ Links:

Download the presentation here.

Consolidated income statement adjusted

	Jan-Jun 2021			Jan-Jun 2021		Jan-Jun 2020
(in CHF 000s)	(IFRS)	% revenue	Adjustments2)	(adjusted)	% revenue	(adjusted)	% revenue
Revenue	192'734	100.0%		192'734	100.0%	173'957	100.0%
Cost of sales	-103'008	-53.4%	207	-102'801	-53.3%	-94'565	-54.4%
Gross Profit	89'726	46.6%	207	89'933	46.7%	79'392	45.6%
Distribution and marketing expenses	-18'831	-9.8%	765	-18'066	-9.4%	-15'805	-9.1%
Research and development expenses	-54'430	-28.2%	2'152	-52'278	-27.1%	-39'482	-22.7%
General and administrative expenses	-12'004	-6.2%	1'806	-10'198	-5.3%	-11'373	-6.5%
Other income	1'137	0.6%		1'137	0.6%	505	0.3%
Operating Profit (EBIT)	5'598	2.9%	4'930	10'528	5.5%	13'237	7.6%
Finance income	5'090	2.6%		5'090	2.6%	87	0.1%
Finance costs	-6'594	-3.4%		-6'594	-3.4%	-3'533	-2.0%
Share of profit of equity-accounted investees, net of taxes	-1'456	-0.8%		-1'456	-0.8%	-1'907	-1.1%
Profit before income tax (EBT)	2'638	1.4%	4'930	7'568	3.9%	7'884	4.5%
Income tax expense	-383	-0.2%	-894	-1'277	-0.7%	-3'207	-1.8%
Net Profit	2'255	1.2%	4'036	6'291	3.3%	4'677	2.7%
Minority interests	21	0.0%		21	0.0%	-69
Net Profit, attributable to equity holders of the parent	2'234	1.2%	4'036	6'270	3.3%	4'746	2.7%
Earnings per share in CHF	0.32			0.89		0.67
Diluted earnings per share in CHF	0.32			0.89		0.67
Operating Profit (EBIT)	5'598	2.9%	4'930	10'528	5.5%	13'237	7.6%
Depreciation and amortization	19'813	10.3%	-1'617	18'196	9.4%	10'905	6.3%
EBITDA 1)	25'411	13.2%	3'313	28'724	14.9%	24'142	13.9%

¹⁾ Management calculates EBITDA (earnings before interest, taxes, depreciation and amortization) by adding back depreciation and amortization to operating profit (EBIT), in each case determined in accordance with IFRS.
²⁾ Adjustments are impacts of share based payments, Pension calculation according to IAS-19, Non-recurring expenses, impairments and amortization of intangible assets acquired.

 

Consolidated balance sheet

	At June 30, 2021	At December 31, 2020
(in CHF 000s)	(unaudited)	(audited)
ASSETS
Current assets
Cash and cash equivalents	85'099	93'874
Marketable securities	500	498
Trade accounts receivables	41'308	33'959
Other assets	72'614	89'627
Total current assets	199'521	217'958
Non-current assets
Property, plant and equipment	11'656	10'024
Right-of-use assets	34'059	32'499
Goodwill	60'976	59'910
Intangible assets	182'685	176'829
Financial assets (incl. equity accounted investees)	1'354	9'011
Deferred tax assets	12'169	11'671
Total non-current assets	302'899	299'944
Total assets	502'420	517'902
LIABILITIES AND EQUITY
Current liabilities	83'939	112'107
Non-current liabilities	126'673	123'110
Total liabilities	210'612	235'217
Shareholders’ equity
Share capital	105'300	105'300
Share premium	16'600	16'600
Retained earnings	169'908	160'645
Total equity, attributable to owners of the parent	291'808	282'545
Non-controlling interest	0	140
Total equity	291'808	282'685
Total liabilities and equity	502'420	517'902

 

Consolidated Cashflow Statement

	For the period ended	For the period ended	For the period ended
(in CHF 000s)	June 30, 2021	June 30, 2020	December 31, 2020
Net Profit	2'255	-60'022	-64'863
Depreciation & Amortization	19'813	85'651	100'250
Other non-cash transactions	2'942	3'312	7'606
Financial income & financial expense	2'960	5'353	14'237
Income tax expense	383	-11'121	-14'187
Change in net working capital and provision	8'901	-5'825	3'370
Income tax paid/(repaid)	5'711	-3'493	-6'894
Net cash generated from operating activities	42'965	13'855	39'519
Net investment into property, plant and equipment	-1'893	-2'855	-4'278
Net investment into intangibles	-15'541	-19'855	-38'441
Net investments into financial assets	315	467	241
Acquisition of subsidiairies, net of cash acquired & participations	1'831	-13'518	-13'517
Net cash used in investing activities	-15'288	-35'761	-55'995
Free Cash Flow (before Acquisition & participations in capital increase)	25'846	-8'388	-2'959
Free Cash Flow	27'677	-21'906	-16'476
Proceeds from issuance of ordinary shares	0	0	0
Par value reduction / Dividends paid to owners of the parent	0	0	-4'269
Net proceeds from borrowings	-34'962	1'076	1'046
Payment of lease liabilities	-2'563	-2'313	-5'726
Purchase of treasury shares	0	0	107
Non-controlling interests	82	125	243
Interest paid	-2'323	-2'566	-2'678
Net cash used in financing activities	-39'766	-3'678	-11'277
Net decrease in cash and cash equivalents	-12'089	-25'584	-27'753
Cash and cash equivalents at beginning of year	93'874	127'424	127'424
Exchange gains/(losses) on cash and cash equivalents	3'314	-1'735	-5'797
Cash and cash equivalents at end of the period	85'099	100'105	93'874

 

About u‑blox

u‑blox (SIX:UBXN) is a global technology leader in positioning and wireless communication in automotive, industrial, and consumer markets. Their smart and reliable solutions, services and products let people, vehicles, and machines determine their precise position and communicate wirelessly over cellular and short range networks. With a broad portfolio of chips, modules, and secure data services and connectivity, u‑blox is uniquely positioned to empower its customers to develop innovative and reliable solutions for the Internet of Things, quickly and cost‑effectively. With headquarters in Thalwil, Switzerland, the company is globally present with offices in Europe, Asia, and the USA.

Find us on www.u‑blox.com, Facebook, LinkedIn, Twitter @ublox and YouTube

Financial calendar

Analyst day:	23 November, 2021
Full year results 2021:	11 March, 2022
Annual General Meeting:	20 April, 2022

 

u‑blox investor relations contacts:

Switzerland and Europe:

Doris Rudischhauser, c/o Dynamics Group AG
Phone: +41 79 410 81 88
E‑mail: doris.rudischhauser@u-blox.com

US:

Jeehae Linford, c/o The Equity Group Inc.
Phone: +1 (212) 836-9615
E‑mail: jlinford@equityny.com

u‑blox AG
Zürcherstrasse 68
8800 Thalwil
Switzerland
Phone +41 44 722 74 44
Fax +41 44 722 74 47
info@u-blox.com
www.u‑blox.com

Disclaimer

This release contains certain forward‑looking statements. Such forward‑looking statements reflect the current views of management and are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the u‑blox Group to differ materially from those expressed or implied. These include risks related to the success of and demand for the Group’s products, the potential for the Group’s products to become obsolete, the Group’s ability to defend its intellectual property, the Group’s ability to develop and commercialize new products in a timely manner, the dynamic and competitive environment in which the Group operates, the regulatory environment, changes in currency exchange rates, the Group’s ability to generate revenues and profitability, and the Group’s ability to realize its expansion projects in a timely manner. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this report. u‑blox is providing the information in this release as of this date and does not undertake any obligation to update any forward‑looking statements contained in it as a result of new information, future events or otherwise.