Tekna Holding reports 30% increase in revenue

Tekna Holding ASA, Sherbrooke, Quebec, Canada, has announced the company’s results for the second quarter and first half of 2024. In the second quarter, Tekna generated CA $11.2 million in revenue, a 1.9% increase year-over-year. The slower than expected revenue development has led management to consider additional strategic adjustments to better align with annual targets.

Despite the challenges, a 30% increase in revenue from the first to second quarter suggests that full-year 2024 revenue is likely to surpass that of previous years.

“While we have recorded good performance in some areas, our overall results are not where we expected them to be. To mitigate the impact on profitability, we are taking corrective actions with resilience and strategic foresight,” said Luc Dionne, CEO of Tekna Holding ASA.

Systems revenue decreased by 1.9% compared to Q2 2023, due to the strong performance and revenue recognition of the PlasmaSonic system last year. As systems revenue is recognised based on project completion, fluctuations are expected.

Advanced Materials revenue increased by 4.2% year-over-year in Q2, below management expectations. This is primarily due to a softer than expected order intake in Q1 from the Additive Manufacturing machine manufacturers, aerospace, and medical sectors, reflecting a broader industry slowdown.

Adjusted EBITDA for Q2 2024 was CA $-1.5 million, down from CA $-0.6 million in Q2 2023. The profitability was reportedly affected by one-off costs of CA $0.5 million in the margin for materials, in part driven by efforts to reduce working capital, and indirect costs that were marked by CA $0.6 million higher costs due to the absence of services historically invoiced to the joint venture.

“We have accelerated the implementation of a comprehensive profitability improvement program. This program is focusing on improving product cost, reducing overhead costs and enhancing organisational efficiency. We anticipate that the cost saving programme can contribute CAD 2 million in adjusted EBITDA over the next six months, with some of the cost savings recurring in 2025,” said Luc Dionne.

Tekna’s total order backlog was CA $18.2 million going out of the second quarter, down from CA $22.0 million in Q2 2023, largely due to lower order intake in systems. The pipeline remains strong for the rest of the year, with CA $2.0 million in system orders already secured in Q3 2024. Conversely, Advanced Materials showed strong demand with an order intake of CA $5.9 million (+18%) and a backlog of CA $14.0 million (+28%).

In the second quarter, Tekna reported that it won an intellectual property case concerning competing patent rights to produce titanium powder in Canada. The losing party has a limited time to appeal the judgement. Per the Federal Court process, Tekna is reportedly working to recoup a potentially significant part of its related legal costs.

Looking ahead, Tekna is experiencing the usual seasonal decline in activity due to the summer holiday period in North America and Europe in Q3. However, the company said it expects a recovery in Q4 2024.

www.tekna.com

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