eEnergy (EAAS ) delivered its FY22 trading update today to 30 June 2022, detailing a record £8.6m of new contract value, £23m of contract forward revenues, successful launches and development of its eCharge EV charging network and onsite solar business, and an overall growing pipeline of new business and new opportunities expected to be converted in FY23.
However, due to Covid restrictions and longer lead times on larger deals, it is now expecting FY22 revenue of approximately £23 million (up c. 70% from £13.6 million in FY21) and Group Adjusted EBITDA of approximately £3.0 million (up c. 250% from £0.8 million in FY21), which are below market expectations.
Trading Update
1H22 revenues suffered from the negative impacts of Covid lockdowns on the pipeline in Energy Efficiency. In particular, Ireland has suffered from harsher and longer lockdowns than the UK during the period.
In addition, disruption caused by the energy crisis, sparked by the conflict in Ukraine, has negatively impacted Energy Management.
Furthermore, lead times from sale to revenue have increased as the Group has expanded the value and breadth of its contracts, due in part to increased interest from customers seeking more than one of its services.
3Q22 saw a return to more usual sales patterns for eEnergy, closing record new customer signings worth £8.6m across its Energy Efficiency and Energy Management divisions.
Momentum is continuing into Q4 with a wide range of new commercial and industrial customers seeking to control high energy prices.
Outlook
Contracted forward revenues increased to £23m from £18m in the previous quarter, with £19.6m coming from the Company's Energy Management arm and £3.4 being Energy Efficiency contracts. Of this forward revenue, £8.3m is expected to be realised in FY23.
Furthermore, eEnergy announced a successful launch and early adoption of eCharge, its EV charging solution, by its customer base. Early expectations have been exceeded in the first 30 days as the Company aims to develop the UK's largest public sector EV charging system.
Finally, demand has been strong for onsite solar generation, as it has become much more economical recently. eEnergy has responded to the shifting economics by developing and offering solar capabilities with £7.8m of forward contract revenue already signed with existing customers, expected to be realised in H1 FY23.
Harvey Sinclair, CEO, commented: "The Board is pleased with the new business pipeline momentum which is not only seeing cross selling of services to existing clients but also to new customers seeking multiservice Net Zero strategies across our energy efficiency and energy management divisions. We continue to invest in new products and services and are excited by the launch of eCharge and our onsite solar power generation offering which has met with strong demand."
View from Vox
Clearly a disappointing update for the outturn of FY22, which the market has duly punished with shares down more than 20% in early trading.
However, no contracts have been lost, and if it were not for some timing issues caused by expanded lead-times between contract signing and project completion, FY22 would still be on track for an improvement over FY21.
Furthermore, increasing lead-times are not always negative and often flag improving industry positioning as the Company benefits from increased interest for multi-service contracts.
We would also look beyond FY22 into FY23 and FY24 to see the positive traction and direction of travel to understand the true underlying value in the business.
With plans to accelerate investment in eCharge and onsite solar, to capitalise on opportunities presented by the energy crisis, we would surmise the Company is well placed to benefit from the UK's accelerated transition to renewable energy.
The long-term prospects for the company are also positive as investments in eCharge and onsite solar begin to deliver RoI and the new, larger contracts convert into recurring revenue.
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