Wellington reconfirms guidance

Wellington Drive Technologies (Wellington or Company) notes the recent strong rise in its share price, up around 20%. The Company remains in compliance with its continuous disclosure obligations and reiterates its upgraded FY2021 guidance from 28 June:

• Wellington is forecasting US$ revenue in the range of US$45m to US$50m, up from the previous range of US$41m to US$46m, and subject to component supply chain risks.
• Before deducting non-recurring charges (as outlined in the 28 June NZX release), Wellington expects underlying EBITDA earnings to be in the range of NZ$3.5m to NZ$4.5m, up from the previous range of NZ$2.5m to NZ$3.0m; and,
• Wellington is currently forecasting to finish 2021 with net cash of around NZ$5m with a further NZ$1.9m of undrawn bank facility.

As noted in the 28 June release, Wellington is experiencing strong customer demand reflecting both new customer wins over the last 18 months, initial revenue from recent new product launches and a strengthening global economy.

The Company previously forecast Q2 2021 revenue of around US$12m and can report that actual Q2 revenue was US$11.7m.

Wellington expects to report its interim result around 25 August 2021. While the Company is still finalising the result, the provisional key metric estimates are:

Interim result: Provisional estimates (NZ$000) H1-2021 H1-2020 Delta
Revenue US$ 22,796 13,369 +71%
Revenue 30,561 20,484 +49%
Gross profit 8,854 6,235 +42%
EBITDA 1,830 1,136 +61%
EBIT 705 (550) +$1.3m
NPBT 617 (773) +$1.4m

Adjusted to exclude IPX contingent consideration ($293; H1-2020 $638 gain) and salary sacrifice repayment ($380)
EBITDA – Adjusted 2,503 498 +403%
EBIT – Adjusted 1,378 (1,188) +$2.6m
NPBT – Adjusted 1,290 (1,411) +$2.7m

Additionally, Wellington closed the first half with a strong cash position of $6.1m (net cash of $5.6m) and $2.0m of BZN financing facility available.

Wellington’s full year FY2021 forecast remains subject to the higher than usual level of risk that prevails in the current global environment, in particular for unexpected cost increases and unanticipated disruptions to supply. The Company is monitoring the worsening COVID situation in Vietnam where its supplier East West is based. Production has been stopped due to positive Covid cases in the production facility and is not expected to recommence for at least two weeks.

Suppliers are reporting an inability to supply some critical electronic components, despite confirmed purchase orders. Wellington’s Supply Chain Team has done well so far this year to secure components, especially with the significant unforecast increase in customer demand and will continue to work to avoid supply disruption over the forecast period. We do not want to disappoint customers.