OXE Marine AB (publ) Interim report 1 October to 31 December 2020

OXE Marine AB (publ) (NASDAQ STO: OXE) (OTCQX: CMMCF)

INTERIM REPORT 

Fourth quarter 2020 

• Net turnover of SEK 4.8 m (SEK 40.1 m)
• Gross Profit of SEK 1.1 m (SEK 4.0 m) or gross margin of 23% (10%)
• Operating Loss/EBIT of SEK -22.2 m (SEK -22.8 m)
• Net loss for the period of SEK -24.4 m (SEK -25.5 m)
• Order Book grew by 38% to EUR 13.9 m or SEK 139.3 m (EUR 9.6 m or SEK 100.9 m as at end of Q3 2020)

January - December 2020 

• Year to date net turnover of SEK 39.7 m (SEK 91.1 m)
• Gross Profit of SEK 5.5m (SEK -3.6 m) or gross margin of 14% (-4%)
• Operating Loss/EBIT of SEK -77.2 m (SEK -88.1m)
• Net Loss for the period of SEK -85.5 m (SEK -102.0 m).
• For the full year, the Order Book grew 227% to EUR 13.9 m or SEK 139.3 m at the end of Q4 2020 (EUR 4.1 m or SEK 42.6 m as at end of Q4 2019)

Significant events during the Fourth quarter 

• The Company carried out a directed share issue of SEK 65.9m to strategic and qualified investors to finance an accelerated growth strategy.
• The Company received the official approval and issuance of the United States Environmental Protection Agency (“EPA”) Tier 3 certificate for OXE300.
• OXE Marine AB distributor Diesel Outboards LLC confirmed order for more than 50 OXE300 from US government for deployment in Central America.
• First shipments of OXE200 parts delivered to Albany (GA, USA).

Significant events after the reporting period 

• OXE125-200 model year 2021 granted approval by EPA.
• Start of assembly of OXE125-200 initiated by ONM in Albany (GA, USA).
• The board of directors resolved to appoint Magnus Grönborg as CEO and to reorganize its management team by appointing the current CEO Myron Mahendra as EVP Business Development, Sales and Marketing. In addition, the chairman of the board Anders Berg will increase his operational focus on the company by assuming a supportive operational role with the management team. Magnus Grönborg will replace Myron Mahendra as CEO in a few months, with the closer date yet to be agreed.
• First units of OXE300 assembled and shipped from PanLink’s Polish site in Tczew.

COMMENTS BY THE CEO 

We continue to see strong demand for the OXE, the company increased its Order Book by 38% to SEK 139.3 m at the end of Q4 (45% organic growth excluding exchange rate differences) – all of which are targeted to be delivered during 2021 - see bar chart below in respect to order book development in the last 15 months.

As explained in my previous interim report, we expected subdued sales for this quarter due to lack of completed units available, and as a result, net turnover amounted to SEK 4.8 m (SEK 40.1 m) for Q4 whilst achieving a gross profit of SEK 1.1 m (SEK 4.0 m) with a gross margin of 23% (10%). As for the full financial year, we achieved a positive gross profit of SEK 5.5 m (-3.6 m) or gross margin of 14%    (-4%) for the first time in the Company’s history. We expect to see a more positive gross margin development in the coming year as the higher margin OXE300 product is introduced to the market.

Our strategic decision of moving the OXE200 production away from UFAB took place during Q2 of the year and we have since initiated the start of assembly of OXE200 series in January 2021 at the chosen facility based in Albany, Georgia in the South East of the US with Outboard Network Manufacturing (ONM) as our assembly partner.

Our preparation for series production of the OXE300 with our assembly partner, PanLink, with its operations in Poland, has progressed well. We continue to build a number of pre-series engines in Ängelholm and have delivered to a number of customers in the US and Middle East for demonstration purposes. We have delivered production series parts to Poland during this reporting period. Since then, the company has started a controlled production ramp up in February 2021.

The Company has continued to monitor its Distribution network - there has been some new appointments as well as terminations, which has led the Company to re-purchase engines, and selling them onwards to new distributors – this has meant no new net sales but has led to improvements in reducing its accounts receivables balance.

We continue with our preliminary assessment of BMW’s 4-cylinder two litre turbo diesel engine for marine application – to power its next generation OXE200 series. We expect to develop a prototype version for sea trials at the end of Q1 2021. Other development work continues in accordance to plan especially with electric outboard solutions.

COVID-19 

Like most companies, OXE Marine was impacted by the global pandemic during the year. In particular, the supply chain was disrupted as various factories were closed due to local lockdown restrictions or because of COVID-19 infections. This was undoubtedly a contributing factor to a slower ramp up in production of the OXE300 as well as causing a delay in the start of serial production. In response to the pandemic, the company put certain employees on short term furlough over the summer period. In addition, the Management team all took a voluntary 20% pay reduction during the same period. During Q4, there were no more employees on furlough, and it has been ‘all hands-on deck’ to ensure we are prepared for 2021 and the start of production of the OXE300 and OXE200. As of now, in Q1 2021, we still see some challenges as a result of COVID-19, in particular the recent travel restrictions to Poland and the US. We have used technology to get around these challenges as best as possible and have recently been able to send personnel to both Poland and the US to assist in the start of production. We therefore continue to mitigate these risks as best as possible during these challenging times.

At the beginning of the quarter, the Company raised SEK 65.9m from a directed share issuance to strategic and qualified investors to finance our accelerated growth strategy. I am grateful for the continued support by our shareholders and various stakeholders.

The Board and Management remain confident of the future and look forward to growing the business in a sustainable and profitable manner.

Myron Mahendra 
Chief Executive Officer

This disclosure contains information that OXE Marine AB is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 19-02-2021 07:00 CET.

Certified Adviser
FNCA Sweden AB is Certified Adviser for OXE Marine AB (publ). Contact details to FNCA Sweden AB: tel. +46 8 528 00 399, e-mail info@fnca.se.

For further information, please contact:
Myron Mahendra, CEO, myron.mahendra@oxemarine.com, +46 76 347 59 82
Anders Berg, Chairman, anders.berg@oxemarine.com, +46 70 358 91 55 

OXE Marine AB (publ) (NASDAQ STO: OXE) (OTCQX: CMMCF) has, after several years of development, constructed the OXE Diesel, the world ́s first diesel outboard engine in the high-power segment. OXE Diesel has a unique belt driven propulsion system that allows a hydraulic multi-friction gearbox to be mounted. This means that the engine can handle significantly higher loads than a traditional outboard engine. OXE ́s OXE diesel has a horizontally mounted engine as opposed to a traditional outboard with a vertically mounted engine.

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