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Interim Report Q3 2022

Re:NewCell AB (publ)

STOCKHOLM, SE / ACCESSWIRE / October 27, 2022 / Re:NewCell AB (publ) (FRA:6QP) (STO:RENEW):

July - September
Financial information

  • Net sales during the period amounted to SEK 3,031k (636)

  • Operating profit before depreciation and amortization (EBITDA) during the period amounted to SEK -58,228k (-23,354)

  • Profit after tax amounted to SEK -101,472k (-24,538)

  • Cash flow from operating activities amounted to SEK -97,050k (-31,567)

  • Cash flow from investing activities amounted to SEK -199,232k (-131,039)

  • Earnings per share, before and after dilution, amounted to SEK -3.0 (-0.8)

  • Net debt* at the end of the period amounted to SEK 446,837k (-420,424). The company's cash totalled SEK 263,384k (425,841)

Significant events during the interim period

  • On the 19th of August, the start-up of Renewcell 1 commenced according to plan.

  • On July 4th, Toby Lawton was appointed new CFO of Renewcell. Toby Lawton's previous position was as CFO of SCA. He assumed his position on October 1, 2022.

January - September
Financial information

  • Net sales during the period amounted to SEK 7,522k (1,465)

  • Operating profit before depreciation and amortization (EBITDA) during the period amounted to SEK
    -158,940k (-61,843)

  • Profit after tax amounted to SEK -223,889k (-67,205)

  • Cash flow from operating activities amounted to SEK -276,128k (-64,984)

  • Cash flow from investing activities amounted to SEK -717,546k (-218,934)

  • Earnings per share, before and after dilution, amounted to SEK -6.9 (-2.2)

  • Net debt* at the end of the period amounted to SEK 446,837k (-420,424). The company's cash totalled 263,384k (425,841)

*A negative number means that the total cash exceeds the total interest-bearing debt

Significant events after the interim period

  • The start-up process of Renewcell 1 has taken longer than previously expected, causing a delay of the production ramp-up and therefore revenue generation from Renewcell 1 and an increase in CAPEX related to the prolonged start-up process of Renewcell 1. The subsequent production ramp-up to 60,000 metric tons is also expected to take longer than previously expected. This leads to an expected increase in the negative profit effect from the fourth quarter 2022 until Renewcell 1 has reached the expected production capacity of 60,000 metric tons.

  • The expected profitability once fully ramped-up remains unchanged.

  • As a result, the Company has a new funding need of approximately SEK 150 million, of which approximately SEK 100 million is required to finance the negative profit effect (operational expenses) and approximately SEK 50 million is required to finance CAPEX.

  • Due to the expected increased CAPEX of approximately SEK 50 million, the total investment for the Renewcell 1 plant in Ortviken (with capacity up to 120,000 metric tons) is now estimated to reach approximately SEK 1.45 billion (compared to the previous forecast of approximately SEK 1.40 billion).

  • As was made public by the Company through a press release on 27 October 2022, the Company therefore intends to raise capital through a share issue to cover the financing need. As a result of this new share issue, the completion of the start-up process and the production ramp-up of Renewcell 1 to 60,000 metric tons in the first stage and then to 120,000 metric tons in a later stage, can be executed, without the need of additional equity, taking into account the delayed start-up and slower than expected production ramp-up.

  • On October 12, the Company held an Extraordinary General Meeting that adopted a new incentive program directed toward two key employees in the Company's executive management.

Other events after the interim period

  • The Company signed a credit facility of SEK 150 million, regarding working capital (Revolving Credit Facility, RCF), which is available after the Commercial Operations Date is reached. The Commercial Operations Date is a defined date in the loan agreements that represents the day the production line achieves the expected functionality.

CEO's comments

Renewcell is scaling up its operations to deliver large volumes of Circulose®, and on August 19, we began the start-up of Renewcell 1 in Sundsvall. We are now running the production line with fiber in the system through all unit operations from beginning to end, and are working to calibrate the line for commercial production. Renewcell 1 will supply the fashion industry with 60,000 tons of Circulose® in the first stage and then scale up to 120,000 tons. We are the first company in the world to recycle textiles on this scale.

However, we have had to acknowledge that the start-up of Renewcell 1 has taken longer than planned. As income from production and sales from Renewcell 1 is now expected to come later, a financing need of around SEK 150 million arises to cover an increased negative impact on earnings from the start-up and capex. The company, therefore, intends to carry out a new share issue which, together with a newly signed revolving credit facility for working capital that will be available in connection with Commercial Operations Date (see Significant events after the interim period) which is expected shortly, secures the financing of both the business and the scale-up to 60,000 tonnes in production capacity in the first stage, and after that to 120,000 tonnes per year. In all humility, it is now clear that we have been somewhat too ambitious in our time planning.

Renewcell makes it possible for the fashion industry to move from a linear to a circular model based on 100% recycled textiles as a raw material. This mission - to make fashion circular - remains high on the global agenda because the fashion industry has a considerable negative impact on the environment. The market is vast, and the demand for Renewcell's product Circulose®, is very high among both brands and fiber producers. The long-term conditions for Renewcell continue to look very favourable.

During the quarter, we continued strengthening the fashion industry's awareness and percept of our ingredient brand Circulose®. Our collaboration with Copenhagen Fashion Week, a world leader in sustainability, began during the third quarter. The partnership focuses on elevating the sustainability aspect of the industry and supporting its most exciting creative talents. The partnership attracted the attention of key industry media, including CNN Style, Vogue and Vogue Business and Hypebae. Several of the creations partially made in Circulose® that our partner Jade Cropper showed during the week have already been seen on stars such as Gigi Hadid, Kylie Jenner and Rita Ora. I look forward to developing the conversation about circularity and creativity together with Copenhagen Fashion Week over the next four seasons.

During the quarter, we broke our sales record from production in the demo facility in Kristinehamn once again. Despite the delay, I am confident that we are well-positioned to create value for our shareholders by making the fashion industry circular.

Stockholm, October 2022
Patrik Lundström, CEO

Contacts:

Patrik Lundström
CEO
patrik.lundstrom@renewcell.com
+46 76 183 47 17

Toby Lawton
Chief Financial Officer
investors@renewcell.com
+46 70 242 29 47

This information is information that Re:NewCell AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 2022-10-27 17:31 CEST.

About Renewcell

Founded by innovators from Stockholm's KTH Royal Institute of Technology in 2012, Re:NewCell AB (publ) (‘Renewcell') is a multi-award-winning sustaintech company based in Sweden. The company's vision is to make fashion circular.

Through its patented process, Renewcell is able to upcycle cellulosic textile waste, such as cotton clothes, transforming it into a pristine new material called Circulose®. Drapers Magazine recognized Circulose® at their 2022 Sustainable Fashion Awards. Fast Company named Renewcell one of the World's Most Innovative Companies 2021. Circulose® was also included on TIME Magazine's list of the 100 Best Inventions 2020.

Renewcell is a publicly listed company with shares traded on Nasdaq First North Premier Growth Market with the ticker name RENEW and ISIN code SE0014960431. FNCA Sweden AB is Certified Adviser, +46(0)8-528 00 399, info@fnca.se.

Attachments

Interim Report Q3 2022

SOURCE: Re:NewCell AB (publ)



View source version on accesswire.com:
https://www.accesswire.com/722659/Interim-Report-Q3-2022