Wellington Drive Technologies market update

19 February 2016

Media Release

For Immediate Release

Wellington Drive Technologies market update

Wellington Drive Technologies (NZX:WDT), a leading provider of energy efficient motors and ‘cloud connected’ controllers to the commercial refrigeration market, is pleased to provide an update on its new product sales and highlights of its unaudited 2015 financial results. This is in advance of fully audited results being released by February 29th.

Wellington receives first production orders for its new SCSConnect and ECR2 products.

SCSConnect ‘cloud connected’ refrigeration controller – In November 2015 we advised that contractual discussions were advanced with a number of global branded consumer products customers for the supply of SCSConnect controllers. We have received a first sizable purchase order from one customer for hardware and data services for delivery in first quarter 2016. This order is expected to be the first in an ongoing deployment program with this customer over the remainder of 2016 and for the following several years. It is expected that we will continue to receive production orders and be shipping products while contracts are taken to completion.

The team continues to support field trials in the USA, Mexico, South East Asia, South America, Africa and Europe as customers develop new IT and operating systems to integrate the business data provided by the SCSConnect. Production orders from customers and continued field trials highlight the positive prospects for SCSConnect and we have started to extend the current platform into an expanded range of applications and value added services.

Forecast 2016 revenues for SCSConnect remain consistent with previous guidance of between US$1m and US$1.6m.

ECR2 energy efficient motor – We have commenced production shipments of the new ECR2 motor to a large US cooler manufacturer which is using the product in a broad range of food and beverage supermarket display cases; the target market for this new motor. We have also received initial orders from other North American supermarket case manufacturers and several European customers as they increase their pilot production needs.

Wellington’s EC motor business saw a strong recovery in the 2015 financial year with volume growth of 28% versus 2014. Continued double-digit volume growth is expected in 2016, supported by increasing sales of our new ECR2 motor and the winning of new customers for our other ECR products. We are seeing adoption of EC motors accelerate, particularly in the USA in response to stricter US Department of Energy regulations.

CEO, Greg Allen commented; “We continue to deliver great products and services to our customers and with these new products now in the market we expect an acceleration of our path to profitable growth. With order intake on SCSConnect and ECR2 during December and January of around 20,000 units and advanced contractual discussions underway, 2016 is off to a strong start.”

Significant growth in 2015 revenues

The company delivered full year unaudited 2015 revenues of $24.6 million, a 38% growth in year over year revenue. This result was in part due to a significant rebound in Latin American sales and growth in the Asia Pacific region. Global motor volumes increased by 23% to over 1 million motors shipped in 2015.

Gross margin improved to 21.4%, up from 18% in 2014, as a result of continued improvement in manufacturing efficiencies and supplier costs. Gains were offset somewhat by pricing strategies deployed to secure new business. (see note 1 below).

Losses continued to decline with EBITDA performance a loss of $1.4 million versus the $4 million loss in 2014 (see note 2 below). Earnings before Interest and Taxation (EBIT) performance was a loss of $1.8 million, a $2.7 million improvement on the $4.5 million loss in 2014.). The result was positively impacted by the lower NZ Dollar versus the US Dollar. Average NZD/USD rate for the 2015 year was 0.707 compared to 0.830 for 2014. Operating cash flows were a positive inflow of $0.8m and the cash balance at 31 December was $2.9m.

Wellington Chairman, Tony Nowell commented; “Every financial indicator improved as expected during 2015 and we were particularly pleased to see the top line growing again and positive operating cash flow. The 2015 performance is very heartening and shows we are on the right path. The team is focusing now on selling our new products and we look forward to further growth in 2016”.

For further information visit www.wdtl.com.

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