Tekna Holding (TEKNA) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue declined 16% year-over-year to CAD 7.6 million, mainly due to a 43% drop in Plasma Systems revenue, while Advanced Materials sales rose 4.6%.

• Adjusted EBITDA improved to negative CAD 1.4 million, reflecting cost-saving measures and operational improvements.

• Net loss for the quarter was CAD 3.7 million, a slight improvement from CAD 3.9 million in Q3 2023.

• Execution on a profitability improvement plan is on track, targeting CAD 2 million in savings in H2 2024, including a 15% reduction in headcount.

• The company remains focused on long-term growth in Advanced Materials, with ambitions to reach CAD 70 million in revenue by 2027.

Financial highlights

• Q3 revenue: CAD 7.6 million, down 16% year-over-year; YTD revenues at CAD 27.5 million (down 7%).

• System/Plasma segment revenue dropped 43%, while Advanced Materials sales rose 4.6% year-over-year.

• Adjusted EBITDA improved by CAD 0.3 million sequentially to negative CAD 1.4 million.

• Net cash from operating activities in Q3 was negative CAD 1.2 million, aided by a CAD 1.1 million reduction in working capital.

• Cash balance at quarter-end: CAD 7.6 million, down CAD 1.7 million from the previous quarter.

Outlook and guidance

• Full-year 2024 revenue expected to be in line with 2023.

• CapEx guidance for 2024 reduced to CAD 2.5 million.

• Long-term target: CAD 70 million in Advanced Materials revenue by 2027, achievable with existing equipment and limited CapEx.

• Order intake for Advanced Materials dropped 62% in Q3 but is now recovering, with Medical, Aerospace, and Consumer Electronics segments showing growth.

• Strong pipeline for PlasmaSonic systems valued at over CAD 300 million, with CAD 35 million in prospects over the next three years.