Canadian plasma system and material developer Tekna (Tekna Holding AS) has forecast that its sales will boom during the coming financial year after its powder orders rose by 25% in Q4 2021.
Over the last quarter of 2021, Tekna’s materials generated (CAD) $4.6 million in revenue, 25% more than they managed to bring in during Q4 2020, and it received $3.3 million worth of orders in December alone. While this wasn’t enough to prevent the firm’s income falling 17% year-on-year to $6 million, it now expects its “sales acceleration to continue through 2022,” putting it back on a growth trajectory.
“Tekna reported a solid order intake for materials in the fourth quarter, raising our order backlog to a record, amid strong demand from the aerospace industry,” explained Luc Dionne, CEO of Tekna.
“The market outlook for additive manufacturing, which accounts for approximately 60% of Tekna’s total revenue, remains positive,” he added, “with demand in consumer electronics in China showing promising developments and sales in medical implants climbing towards pre-COVID levels.”
Tekna’s Q4 2021 financial results
Effectively, Tekna reports its financials across two main segments: Materials and Systems, with the former significantly outperforming the latter during Q4 2021. Citing “Covid-related execution delays,” the company says that its Systems revenue fell 62% between Q4 2020 and 2021, but it doesn’t believe this conversion slump will continue, given that it has $5.1 million worth of related orders in its backlog.
Yet despite this, and the fact that its customers postponed another $0.8 million of powder orders to Q1 2022, demand for its materials still soared over the course of Q4 2021, with its order intake hitting $6.6 million. This increase, which took the firm’s annual figure to $19.8 million, was largely driven by demand for its 3D printing materials from its aerospace clients, which accounted for 50% of its total sales.
During Q4 2021, Tekna also saw the adoption of its materials within the consumer sector continue to rise dramatically, growing by 200% between H1 and H2 2021 alone. According to the company, this demand was driven by an industry “seeking to reduce process costs and improve mechanical performance,” and it received a five-ton order in the last quarter.
Elsewhere, in medical, Tekna says that appetite for its materials is recovering, hence its sales there have risen 114% over the last two years, and it expects this rate of growth to accelerate moving forwards, with its Ti64 offering set to replace Cobalt Chromium which it says is “considered hazardous by European and U.S. authorities.”
Looking ahead, given that its material order backlog hit $10.2 million during Q4 2021, with a number of its OEM customers committing to long-term deals, the firm anticipates seeing “sizeable orders in 2022 and in the coming years,” which it expects to be converted by its “growing sales force in all geographic territories.”
| Financial Highlights (CAD $) | Q4 2020 | Q4 2021 | FY 2020 | FY 2021 |
| Revenue | 7.4m | 6m | 22m | 26.8m |
| Gross Margin | 55% | 28% | 49% | 44% |
| EBITDA | 3.1m | -3.8m | 0.3m | -8.7m |
| End of Period Cash Balance | 2.5m | 38.6m | 2.5m | 38.6m |
| Recurring Revenue (as % of Materials income) | 82% | 91% | – | – |
Creating an aerospace sales pipeline
Unsurprisingly, given that half of Tekna’s custom comes from the aerospace sector, the firm focused a lot of its activities in this area during Q4, making breakthroughs along the way that no doubt contributed to its powder sales success.
Over the quarter, the company says it was added to the qualified supplier list of an unnamed European engine manufacturer, in a deal that followed on from an existing five-year supply agreement, while its work towards qualifying its materials for Airbus applications remains ‘on target,’ with a powder delivery scheduled to take place later in FY 2022.
In the Korean, French and American automotive industry, meanwhile, the firm adds that it “made consistent progress” towards uncovering applications for its materials in Q4 2021, with its demand in the sector recovering 82% against Q4 2020 as well.
With the aim of further boosting its future powder sales fulfillment capabilities, Tekna has also announced the consolidation of its European production at a new facility in France. Set to have a manufacturing capacity of up to 1,500 tons, the complex’s opening is designed to strengthen its end-to-end supply chain resilience for customers, reduce its global carbon footprint and improve its overall margins.
“This facility will be the centerpiece of a supply chain that is 100% European-based, ranging from feedstock procurement to manufacturing of advanced powders, and delivery to point-of-use,” added Dionne. “Tekna’s ambition to enable a green economy through the efficient use of resources and the elimination of waste is taking shape.”
“We are strengthening the company’s supply chain resilience, reducing our carbon footprint and enabling the industry to operate in a circular economy.”
Plans to uplist in the offing?
Rather than provide an outlook for the coming quarter or the 2022 financial year, Tekna concluded the presentation of its results by issuing a set of ‘mid-to-long term ambitions’ for its sales performance. These goals include reaching 40-50% organic revenue growth per year, as well as an operational EBITDA margin of 25% and selling over 30 plasma units by 2025, before hitting the 250 mark by 2030.
Tekna believes these targets are feasible given the “megatrends accelerating demand” for its materials, and the potential of its plasma technology to drive “disruptive manufacturing change.” In fact, the firm is so confident of its future success, that it’s now publicly considering uplisting from the Euronext Growth to the main Oslo Stock Exchange, in order to take advantage of investor interest there.
“We go into 2022 with a record high total order backlog of $15.3 million, and with steadily expanding production capacity both in Canada and in Europe,” concluded Dionne. “Given the company’s solid outlook, we plan to uplist to the Oslo Stock Exchange main list over the course of 2022.”
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Featured image shows Tekna’s new France-based European powder production facility. Image via Tekna.
