Wellington Drive remains in the black as it raises operating forecast

Tuesday 22nd October 2019

Wellington Drive Technologies has posted a $580,000 net profit for the nine months ended September. However, that's down from the first-half net profit of $770,000 and the company says the full-year bottom line will be about break even.

Despite the bottom-line decline the company has revised upwards its full-year operating profit.

The company says it expects further improvements in earnings before interest, tax, depreciation and amortisation to $3-3.5 million for calendar 2019, up from previous guidance of $3 million and compared to $2.5 million in 2018.

In fact, the company has already exceeded that full-year guidance in the nine months ended September, posting $3.1 million ebitda, nearly triple the previous year's $1.1 million.

Wellington was founded in 1986 to commercialise energy-efficient motors but has been transformed over the last few years to provide “internet of things” management tools such as fleet management and refrigeration control to leading global food and beverage brands as well as new generation energy-efficient motors.

IoT revenue for the nine months jumped 38 percent to $17.5 million and accounted for 38 percent of total $45.9 million revenue, which was up 13 percent.

Revenue from motors rose just 1 percent to $27 million but that included a 30 percent decline in revenue from legacy products, in line with forecasts.

The third-quarter result "keeps the company on track to achieve its 2019 guidance," says chief executive Greg Allen.

"The third quarter generally sees lower seasonal trading volumes, which was the case, while it was pleasing that we managed a small ebitda profit," Allen says.

"We were particularly satisfied with the year-over-year margin improvement as a result of cost reduction efforts and the continued benefit from the change in mix towards our ECR2 and IoT and data services products," he says.

Gross margin in the nine months rose to 26 percent from 24.4 percent in the same nine months last year.

"Our business development efforts are uncovering new opportunities for our iPX digital marketing platform in food and beverage which, whilst early in nature, are an important indication of the attractiveness of our marketing services solution."

For the 2020 calendar year, Wellington says early planning models suggest revenue growth of 10 percent is possible with further improvements in ebitda, net profit and positive operating cash flows.

Wellington produced its first operating profit in the six months ended June, 2016 but is yet to deliver a full-year bottom-line profit – the full-year net loss in 2018 was $713,000.

Its accumulated losses at June 30 were $114.5 million.

Wellington shares are trading at 18.5 cents, up 8.2 percent from yesterday, but are down from a peak of 28 cents in April.

(BusinessDesk)

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