Media Release

For Immediate Release

Wellington achieves earnings guidance, with 36% revenue growth rate

1 March 2019

Wellington Drive Technologies (Wellington), a leading provider of Internet of Things (IoT) solutions and energy efficient motors to the retail food and beverage industry, today released its fully audited financial statements for the year ended 31 December 2018.  Complete financial accounts for the 2018 year, with management discussion and analysis, can be found on the NZX website, under the Ticker NZX:WDT at https://www.nzx.com/instruments/WDT

The increasing momentum of new Wellington Connect IoT products, including hardware solutions, data and digital marketing services, and the continued growth of ECR2 motor sales, resulted in the fourth quarter of 2018 being the highest revenue quarter in the company’s history.  The company achieved an EBITDA1 surplus of $2.5m, achieving its EBITDA1 earnings guidance in the range of $2m to $3m, and a positive operating cash flow of $1.8m.  This EBITDA1 result includes a $0.3 million gain due to the adoption of NZ IFRS 16 accounting requirements for leases.

Wellington’s strategy is focused on investing in and growing its IoT business with large food and beverage brands and developing customers for its ECR2 motor.  Its sales initiatives, developed to find adjacent markets for its IoT and EC Motor products, have resulted in new customer wins in the dairy, beer and food markets. This success is amplified by the rapid global adoption of IoT solutions.

CEO Greg Allen commented “Over the last year Wellington has increased its ECR2 motor revenues, won considerable new IoT business and established a leading position in commercial refrigeration IoT.  We regard IoT adoption in 2018 and 2019 as the early stages of an ongoing global mega-trend.  There are many opportunities for growth in adjacent segments as well as offering new services to existing customers.  IoT market trends coupled with our customers’ demand has given us the confidence to accelerate investment, with a view to strengthening our current market leadership and positioning ourselves for strong medium-term growth in revenues and profits.  Whilst this level of investment will limit earnings growth in the near term, we believe that it will be positive for medium-term shareholder value creation.”

 Key Highlights

  • Strong revenue growth: Revenue increased 36% to $58.8m, consistent with revenue growing at a compound annual growth rate (CAGR) of 35% for the last five years.
  • New product growth: Wellington Connect SCS volume grew 62% and EC motor volume grew 24%, with ECR2 growing 75%.
  • Gross margin improvement: Margins increased slightly to 24.3% from 23.9% in 2017. Further improvement was hindered by additional costs caused by global supply constraints for electronic components.
  • Data and software services growth: Services billings for the year increased to US$1.3m, from US$0.7m in 2017. The company received its first purchase orders for its digital marketing services from a large beverage brand.
  • Profit improvement: Increasing financial predictability demonstrated by EBITDA1 of $2.5m, compared to $0.5m in FY17, meeting EBITDA1 guidance of $2 to $3m. The company delivered its first ever EBIT profit of $0.5m compared to a loss of $1m in 2017.  Net loss for the year was $0.7m, versus $2.0m in 2017.
  • Successful acquisition: The successful acquisition and integration of iProximity Pty Limited (iProximity), an Australian digital marketing solutions and consumer intelligence company. This acquisition contributed to the winning of new customers for the Wellington Connect IoT platform.

NZD (unless otherwise stated)
31 December

2018

2017

Change

Revenue

$58.8m

$43.3m

+36%

Wellington Connect IoT Revenue

$17.2m

$10.3m

+67%

ECR Motor Revenue

$38.6m

$30.3m

+27%

Gross profit

$14.3m

$10.3m

+38%

Gross margin %

24.3%

23.9%

+1.6%

EBITDA1

$2.464m

$0.538m

+358%

Loss for the year

($0.713m)

($1.98m)

64%

Operating cash flows

$1.849m

$1.257m

+$0.6m

 

2019 outlook

The first quarter of 2019 is looking relatively strong and Wellington anticipates revenues higher than the same period in 2018, coupled with improved EBITDA1 performance.

During 2019 Wellington will continue to focus on investment in new software development, customer-facing skills, new customer IoT programmes and expanding its ECR2 motor platform. The company will continue its revenue diversification strategy by broadening IoT growth beyond its historical carbonated soft drink beverage market focus and obtaining new customers for its ECR2 motor range.

IoT demand forecasts continue to look robust, with this part of the business expecting continued full year revenue growth of around 30%. IoT is anticipated to contribute close to 41% of total revenues.  Gross margin for the IoT business is expected to increase due to an improved product mix, and in part due to the expanding nature of higher margin data and software revenue.

As a result of initial forecast weakness in EC motor demand and planned competitive strategies in the lower end of the bottle cooler market, countered somewhat by expected growth in IoT, the company’s total revenue in 2019 is expected to be flat to slightly up when compared to 2018.  The company’s business mix is changing and is increasingly targeted to its higher margin IoT products.  Accordingly, EBITDA1, Net Profit and operating cashflow are expected to be higher in 2019 when compared to 2018.

About Us:

Wellington is a leading provider of IoT solutions, cloud-based fleet management platforms, energy-efficient electronic motors and connected refrigeration control solutions. It serves some of the world’s leading food and beverage brands and refrigerator manufacturers, and offers proximity-based marketing for Smart Cities to the Australian market. Wellington’s services and products improve sales, decrease costs and reduce energy consumption. Headquartered in Auckland with a global reach, Wellington is listed on the New Zealand stock exchange under the ticker symbol NZ:WDT

For further information visit www.wdtl.com


Contact:

Greg Allen
Chief Executive Officer
Phone +1-778-238-6494

Steve Hodgson
Senior Vice President, Commercial
+64 21 843-029