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Drone Volt

CR
Bloomberg   ALDRV FP
Aerosp. & Defence Equipt.  /  France  Web Site   |   Investors Relation
From distributor to service provider.
Target
Upside 148%
Price (€) 0.01
Market Cap (€M) 13.8
Perf. 1W: 1.28%
Perf. 1M: 2.60%
Perf. 3M: -18.6%
Perf Ytd: -21.0%
10 day relative perf. to stoxx600: 2.58%
20 day relative perf. to stoxx600: 0.21%
Earnings/sales releases26/03/2024

Drone Volt ready for new growth phase

Drone Volt announced yesterday its audited FY23 figures, confirming an improvement in profitability despite experiencing several external headwinds.


Fact

Sales had already been announced at €23.993m, a 75% increase compared to last year.
The gross margin was revised slightly upwards to €3.673m, increasing by 27% compared to last year and above the previous estimate of €3.394m
EBIT also improved substantially from €-22.039m to €-5.287m although it came in lower than our estimate of €-4.434m as we had forecast lower depreciation levels notably.
As a result the net result came in lower than our estimate at €-6.042m from €-26.321m (AlphaValue estimate €-2.893m) due to a higher tax charge than we had expected.
Shareholders’ equity stood at €20m, following 2 rounds of capital raising in 2023.
For 2024, sales and margins are expected to improve further as the company focuses on the commercial development of its drone as a service offer.


Analysis

A notable improvement in profitability
The improvement in the EBIT margin from -160% to -22% was firstly due to the high increase in sales as well as efforts on external charges that decreased slightly from €-3.8m to €-3.6m, a noticeable performance in this high growth context, mitigating the additional €0.55m personnel charge related to the recent acquisitions of Lorenz and Air Marine. The difference also came from last year’s high provisions related to Aquiline drones (€-15.1m) which provided a favourable comparison base.
As a result the net result came in lower than our estimate at €-6.042m from €-26.321m (AlphaValue estimate €-2.893m) stemming from a write off of a small part of the tax loss carry-forwards, generating a one-off tax charge of €0.5m.

Strengthened financial profile
Net debt was stable at €3.7m at end-2023 (FY22: €3.6m), although the balance sheet has been strengthened since then by the €2.5m in capital raised in early 2024, preparing the company for a new phase of sales growth. The negative net income impact was already mitigated in 2023 by two capital raisings, improving shareholder’s equity by c. €4.2m yoy.

Upbeat 2024 outlook
The group had already announced a month ago that it expected a doubling in sales (Q1 23: €1.6m) and gross margin (Q1 23: €0.32m) enabled by the delayed completion of the €20m distribution contract and also the good momentum in higher-margin services delivered in the US notably.
In 2024, sales growth should be driven by the geographical expansion of sales, in the Middle East via its new distribution partnership with an actor based there and, in Europe and Canada, for the drone as a service offer. Furthermore, the new European-produced Kobra drone should contribute in H2 24 as it caters to European police and armies’ operational needs while meeting data security requirements.
The company stressed its commitment to maintaining cost discipline in 2024, by outsourcing part of the new business generated for its drone as a service offer to “ambassadors” (11 for now), while not sacrificing much the c.60% margin in these cases. At the same time, capex is expected to come down substantially (c. -50%) as the product offering (Linedrone, Hercules and particularly the new Kobra) is now completed. The company will thus exert its operating leverage and should enter into a virtuous circle as these effects continue in 2025, thereby bringing operational profitability ever closer.


Impact

Overall, this release shows that the worst is probably behind us for Drone Volt and operational profitability should now be in sight if the higher-margin sales ramp-up goes as planned. We shall nonetheless have to revise our 2023 profitability figures downwards as the actuals came in short of our expectations.


Updates

19 Apr 24 Earnings/sales releases
Drone Volt on the move

26 Mar 24 Earnings/sales releases
Drone Volt ready for new growth phase

30 Jan 24 Earnings/sales releases
New annual sales record and new capital incre...

20 Oct 23 Earnings/sales releases
Ambivalent Q3 results

18 Sep 23 Earnings/sales releases
H1 23: the beginning of the awaited resurrection

17 Jul 23 Earnings/sales releases
H1 23: Strong growth backed by Drone Volt’s o...

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