Autostore Hldgs Reg S

Today's presentation is hosted from Oslo, Norway, and I'm joined by two members of our executive team, Mats Hovland-Vikse, AutoStore's CEO, and Paul Harrison, the Chief Financial Officer. Moving on to the disclaimer, as usual, we would like to remind you all of the disclaimer with regards to our forward-looking statements, which you can read here at your convenience. Looking at the agenda, we will first have Mats and Paul providing you with an update on the business and discuss the third quarter results in particular. As a reminder, all our financials are stated in US dollars and the management discussion will then be followed by a Q&A session with participants joining via the earnings call on phone and on the webcast. For webcast participants, please submit your questions at any time in the webcast player. We will then conclude the session with some final remarks from Mats. And with that, Mats, please take the floor.

Thank you, Christian. So, looking at the highlights of this quarter, as you can see on this page, the team has delivered yet another solid quarter, especially bearing in mind the macro landscape we're in. On the financial highlights, in the third quarter of 2023, we achieved revenue of 145 million compared to 147 million in Q3 2022. As we communicated in August, revenue in this quarter was sequentially slightly lower than Q2 due to the project nature of our business and given customer project delivery schedules. At the same time, we continue to deliver a very strong gross margin of 68%, which is 14 percentage points higher than Q3 of 22. For the last three quarters, gross margin has been at a high but also sustainable level. And this here is a result of active actions like price increases and good cost controls. Correspondingly, we delivered a strong EBITDA margin of 47%, which means that we continue to be around historical and industry-leading margins. On the order intake side, we're happy to report sequential growth of 11% to 152 million, taking our backlog to 464 million. The order intake was roughly evenly split between new and existing customers, and the vast majority was related to brownfield projects, meaning the automation of existing warehouses. As we've noted before, in this challenging macro environment, we've seen certain project deliveries being shifted from 2023 to 2024. Consequently, we are updating our 2023 revenue guidance to around $640 million. On the operational highlights in the quarter, we released our fast-charging new R5 Pro robot. Its longer battery capacity offers significant efficiency gains for our customers and further improves our position in the high-throughput segment of the market. In this quarter, we also introduced a new price increase of net 3%, whereby we removed the grid surcharge completely and replaced it with a fixed general price increase. And finally, on the highlights, I'm extremely happy to introduce our new CFO, Paul Harrison. When we got to know Paul, his background and experience from global and rapidly growing businesses really stood out. And I'm super excited about partnering with Paul in this next chapter of Autostore's growth journey. So moving on. As you'll see on this page, we have a unique, well-established and powerful global platform for further growth. And remember that only around 20% of the market for warehouse automation is currently penetrated. We are strongly positioned to grow for the foreseeable future. And as we've demonstrated, our financial model is extremely powerful with high gross margins, high operating margins and strong cash flow conversion. So let me highlight some of the numbers. To date, we've sold more than 1,350 systems and over 61,000 robots in 52 countries. This is a scale and reach unlike any other player in the industry, spanning all key geographies, virtually all end markets, and crossing all system types. We have an efficient go-to-market model where we sell through a network of now 23 distribution partners. And together with them, we have built a scaled global platform with now more than 950 unique end customers. And this here has doubled over the last few years, representing a fantastic platform to grow from. Around 45% of our sales are to existing customers seeking to expand their order store estate, either through extensions of existing sites or through new installations. And this then converts into strong financial KPIs. We have high growth with 50% CAGR since 2017, around 80% annual growth the last two years, and 10% in a declining market this year, meaning we keep gaining market shares. and not only high revenue growth. We have done this with industry-leading profitability. The last couple of quarters, our EBITDA margin levels has been around 50%. And we also have high cash conversion of 79% in Q3. So let's move on to order intake and backlog. And it is fair to say that in the market environment we're in, it's affecting the timing of investments among our customers. And given this backdrop, it is good to report a sequential growth in order intake of 11%. The market activity and interest in our system remains very high, but we continue to see some customers deferring commitments. Looking geographically, we see North America being somewhat stronger than Europe and APAC. At the end of Q3, our order backlog was 464 million, of which 293 million relates to 2024. And the quality of the backlog remains high, and we have not experienced any cancellations of orders to date. Historically, we've seen a 99% conversion rate from order backlog to revenues. We continuously innovate on the hardware and software side to further improve our technology and we're not standing still. Our most recent product launch was the R5 Pro. This is the latest version of our field proven robot featuring significantly faster charging capabilities and better battery capacity. This new robot is designed to address specific demands of large scale e-commerce operations enable a better space usage, higher performance, and reduce total ownership costs for companies running multi-shift operations at scale. In total, we see efficiency gains of up to 18% in these type of applications, which just further strengthens our position in the high throughput segment of the market. So let's now reflect on our customer portfolio, which today count roughly 950 unique customers globally. We've included a small selection of them here on this page. And the key message looking at this picture is that we are very well diversified across a wide range of end markets. We support e-commerce and omni-channel fulfillment across different end markets. And in addition, we serve end markets like industrials, automotive, healthcare, and even libraries. As we say, as long as your product fits inside our bin, we offer a great solution. And clearly, at this time, we know you're interested in learning about our exposure to consumer and retail. And even though this part of the market has been on the soft side the last few quarters, we regard a solid footprint not only among the largest online retailers of the world, but also many of the world's most innovative companies as a great strength, given the long-term attractiveness of the sector. Our own calculations indicate that approximately half of our business is exposed to e-commerce omnichannel. And one of the logos on this page is DHL, a customer we've supported for many years. This week, we announced a deeper partnership with them, which is a great endorsement from a world-leading logistics player. So let's have Markus Voss, the CIO and COO of DHL Supply Chain, tell us more about it.

I'm delighted to celebrate an enlarged and enriched partnership with AutoStore today. We have more than 600,000 employees working for us, operating in 220 countries, and we are offering a comprehensive portfolio of logistics solutions for our customers. We're also leading in terms of innovation, automation, and scaling digital solutions. And digitalization indeed mitigates a lot of the things that keep us and our customers awake. AutoStore, providing a standardized and modular technology. DHL, providing the scalability and adaptability. And with our partnership, we'll be able to cut the implementation timelines by half. Since 2012, We have already 12 of these sites operation across the globe and shortly we'll have more than a thousand of these robots performing work for us. We serve blue chips companies as well as rising stars and what they all like is the high throughput for e-comm, for retail and it is well suited to the spare parts industry. We've seen great improvements, like five times higher productivity when we have implemented these solutions. We're seeing throughputs of 500 units per hour, increased efficiency, accuracy, and also visibility. And our colleagues love this solution and the ergonomics of it, the user-friendliness. And not only that, they're also saving 12 kilometers of walking distances per day. And that is quite something. So very excited to see many, many more of these solutions implementing across the globe for our customers. Thank you.