July 21, 2022
Smart Wires Technology Ltd (“Smart Wires”) today announced a new outlook regarding full year 2022 revenue in the range of $55M – $60M, previously stated as $65M to $70M. The company also suspended the previously stated outlook regarding full-year 2022 gross margins rising to 12% to 14% and EBITDA loss between $57M to $62M. No new outlook regarding gross margins and EBITDA is provided. The company reiterates 2022 orders outlook of $100M to $120M.
The COVID pandemic and the subsequent series of lockdowns and restrictions in China and other major markets, and the Russian invasion on Ukraine, continue to put pressure on global supply chains. Although Smart Wires has no operations in or sales from Russia and Ukraine, and limited dependence on China, the company’s production volume and platform deployment are impacted by global disruptions in the supply chain affecting material availability, lead times, supplier quality, logistics, and costs. The high uncertainty connected to raw material, components, parts, and sub-assemblies greatly limits forecasting ability for the near term. Against this background, Smart Wires has decided to lower the 2022 revenue outlook and to suspend the 2022 gross margins and EBITDA outlook.
Throughout 2022 Smart Wires has deployed various strategies to manage supply chain vulnerability and uncertainty. Near term, the business has developed a deep daily management process on material availability by production week, project, and commodity to track percent availability required to support targeted production. In addition, the company has added numerous supplier, reseller, and distributor options to help offset extended original manufacturer lead times (driven by backlog and production constraints). Smart Wires believes these steps support the company’s revised production targets for 2022 but recognize purchase price variance and other cost adders remain open.
Mid-longer-term, Smart Wires has established significant shifts on supply chain strategy by qualifying additional key suppliers across all commodities that add different regional sources, greater competition, alternatives, back-up options, multiple logistical options and greater strategic alignment and support. Smart Wires expects the supply chain to improve every quarter and anticipates ongoing improvements with full normalization by Q4 2023.
Market demand for Smart Wires technology continues to build as more and more governments, companies and consumers realize the importance of taking action to transform how electricity is produced, transported, and consumed. The company has a growing order backlog of $72M with additional orders expected in the back half of 2022. A second largescale project with ISA Transelca, a key lighthouse customer in Latin America, was received in May 2022. This builds on existing projects in the region, demonstrating how a market evolves from pilot, to initial application, to large-scale applications and ultimately to platform adoption.
The company continues to expect $100M to $120M in orders in 2022 with more than 50% coming from key lighthouse customers in the UK, Australia, and Colombia. In the UK specifically, there are over 15 power flow control projects recommended for investment in the latest NOA (Network Options Assessment) published by the National Grid ESO. The NOA lists the network reinforcement projects that are critical to facilitating the energy transition and should receive investment by Transmission Owners in the UK. The continued adoption of the technology by key lighthouse customers strengthens the order target of $100M to $120M.
Smart Wires will present their Q2 2022 Interim Report on 11th August 2022. A webcast will be held at 15:00 CEST via https://financialhearings.com/event/44070.
Julie Andrews, CFO
Tel: +1 (901) 687-8314
This information is information that Smart Wires Technology Ltd 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 2022-07-21, 21:30 CET