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Wellington Drive beats 2H sales forecast, will meet earnings guidance

Friday 15th February 2019

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Wellington Drive Technologies says revenue rose 36 percent in calendar 2018 and it will deliver an operating profit as promised.

Revenue in the fourth quarter of US$11.9 million was 43 percent higher than in the same quarter a year earlier, taking full-year revenue to US$41.8 million, or NZ$58.7 million.

Wellington had said its second-half revenue would be consistent with its first-half revenue of NZ$28 million but second-half sales came in 9 percent higher at NZ$30.7 million, the company says in a statement.

“Q4 is the highest revenue quarter we have had in the company’s history and December was the highest ever month,” says chief executive Greg Allen.

The efficient motors and related products manufacturer says it expects earnings before interest, tax, depreciation and amortisation will come in about the middle of its $2-3 million guidance range and will include a $300,000 benefit from adopting a new accounting standard for leases.

“Wellington continued to generate significant revenue growth in full-year 2018, underpinned by the Connect SCS and ECR2 products,” the company says.

The company says EC motor volumes increased 24 percent and Connect SCS volumes jumped 62 percent as new and existing customers increased their adoption of both.

Annual revenue from the United States and Canada increased 61 percent while Latin American sales were up 34 percent. Asia-Pacific sales rose 16 percent while sales to Europe, the Middle East and Africa grew 9 percent.

“The significant growth in the US and Canada was driven by the continued success of the ECR2 motor with a major cooling equipment customer.

“The business in Latin America benefited from the new Wellington Connect IoT customers in Central and South America and higher demand from its Brazilian business as a key motor customer experienced higher than normal demand,” the company says.

Wellington’s gross margin for 2018 was 24.3 percent, up from 23.9 percent in 2017.

Still, it says the company was impacted by global supply constraints for electronic components and it incurred an additional $500,000 of cost to secure components. It is also seeing increasing competitive price pressure on some of its EC motor products.

The company says it is still finalising its accounting for the July 2018 purchase of iProximity  so can’t yet provide guidance on the earnings it will report on Feb. 27.

Wellington was founded in 1986. It produced its first operating profit in the six months ended June, 2016 but is yet to deliver a bottom-line profit. Its accumulated losses at June 30 last year were $114.3 million.

Wellington shares are trading 1 cent higher at 23 cents and have gained more than 45 percent in the past 12 months.


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