Bawat Water Technologies (BAWAT) Q2 2024 earnings summary

Executive summary

• Permanent Ballast-as-a-Service (BaaS) installation launched in Hamburg Port, marking a global first and positioning the company as a first mover in the BaaS market, with positive initial reception from authorities and stakeholders.

• Dissolution of the partnership with Green Swan in the U.S. allows full focus and ownership of the BaaS initiative, expected to improve long-term earnings.

• Significant investment in BaaS strategy, including SEK 25 million raised post-quarter for mobile unit manufacturing and expansion.

• Q2 sales reached SEK 8.8 million, similar to the first half of last year, but still behind the pro rata target for the full year due to delays in order conversion and new mobile system placements.

Financial highlights

• Q2 2024 sales were SEK 4.4 million, up from SEK 4.1 million in Q2 2023; H1 2024 sales reached SEK 8.8 million.

• Gross profit for Q2 2024 was SEK 0.3 million (7.8% margin), down from SEK 1.4 million (35.0%) in Q2 2023, mainly due to initial deliveries from a new manufacturing partner.

• EBITDA for H1 2024 was SEK -12.4 million, nearly flat year-over-year; net result for H1 2024 was SEK -21.6 million.

• Guidance reduced by SEK 12 million, with over SEK 9 million attributed to the U.S. partnership dissolution; expected to be compensated over time as BaaS earnings accrue.

• Cash at end of Q2 2024 was SEK 7.6 million, with net interest-bearing debt at SEK 57.9 million.

Outlook and guidance

• 2024 sales guidance revised to SEK 30–42 million (from SEK 42–54 million); EBITDA guidance to SEK -17 to -12 million (from SEK -12 to -7 million), reflecting impact of partner separation.

• Cash breakeven/EBITDA break-even now expected in Q1 2025, one quarter later than previously planned due to the partner separation.

• Long-term gross profit margin target raised from 30% to 40% as BaaS matures.

• Full implementation of the Ballast Water Convention in September 2024 expected to drive significant growth in BaaS and mobile BWMS units.