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CONTINUED DEMAND IMPROVEMENT BUT SUPPLY CONSTRAINTS IN Q3

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Announcement        
To Nasdaq Copenhagen A/S and the press

Nørresundby, Denmark, 23 August 2021
Announcement no. 46/2021

INTERIM REPORT FOR Q3 AND 9M 2020/21
(the period 01.10.2020 â€" 30.06.2021)

“We continue to see the demand situation gradually normalizing, even as COVID-19 still had an impact on the third quarter of 2020/21. For the second quarter in a row we did see significant quarter-on-quarter improvement in demand and RTX revenue in the third quarter of 2020/21 increased by 36% over the second quarter and by 97% over the first quarter of 2020/21. Looking ahead to the fourth quarter, we have the highest ever order backlog for a quarter in RTX’s history. The supply chain issues from the global electronics component scarcity and logistic challenges continued in the third quarter of 2020/21 and has postponed revenue into the fourth quarter of 2020/21. All in all, revenue in the third quarter decreased 24% compared to last year also impacted by a weaker US dollar â€" corrected for the dollar development the decrease was 17%. During the quarter, we continued the initial deliveries under the newest major Enterprise framework agreement, while initial deliveries of products under the newest major ProAudio framework agreement will continue into the fourth quarter. As we expect continued demand improvement, but also further supply chain challenges, we are maintaining the outlook for the financial year 2020/21. Due to the continued supply challenges uncertainty regarding the remainder of the year is higher than usual. We see the improving demand situation as further proof that the strategic direction of RTX is sound and we are maintaining the strategic investments into RTX’s product platforms.”

Peter Røpke, CEO

HIGHLIGHTS Q3 2020/21

  • Net revenue decreased by 23.9% to DKK 120.6 million in Q3 2020/21 (Q3 2019/20: DKK 158.5 million). While Q3 revenue was impacted by COVID-19 in the Enterprise and ProAudio segments, the demand situation continued to improve in the quarter as revenue increased by 36.3% over Q2 and by 96.8% over Q1. Supply challenges related to component scarcity and logistic impediments had an adverse impact on revenue in Q3. In total the combined effect of the component scarcity and other supply chain challenges across all segments has postponed revenue of approx. DKK 40 million from Q3 into Q4. As similar supply challenges had postponed revenue of approx. DKK 30 million from Q2 into Q3, the net effect on Q3 from supply challenges was a negative revenue impact of DKK 10 million. All segments have been impacted, with the Enterprise segment having been impacted the most.
  • Enterprise segment: Revenue in the quarter decreased 25.6% compared to last year to DKK 82.1 million with COVID-19 affecting customer access to end customers’ sites for installation of communication systems. However, revenue increased by 40.1% over Q2 with most customers again increasing demand. Product deliveries under the newest Enterprise framework agreement which commenced in Q2 continued in Q3.
  • ProAudio segment: Revenue decreased by 15.6% compared to last year to DKK 25.8 million. Recurring revenue from product sales and royalty increased over last year due to an increase in demand for RTX’s product platforms in the ProAudio segment in line with the segment strategy. On the other hand, COVID-19 impacted product sales negatively in the quarter for products in the intercom market related to live events. Also, revenue from engineering services decreased compared to last year in line with the strategy to focus on creating recurring revenue. Revenue increased 19.8% over Q2.
  • Healthcare segment: Revenue decreased by 27.9% to DKK 12.7 million. The comparative revenue in Q3 of last year was significantly boosted by the outbreak of COVID-19 which led to an unusually high demand for patient monitoring equipment, while the revenue in Q3 of this year is at a more normal level. Revenue in Q3 increased by 51.4% over Q2.

    •   FX corrected revenue development amounted to a decrease of 16.9% as revenue compared to last year was negatively impacted by a weaker US dollar.

  • Gross profit decreased by 29.2% to DKK 60.8 million in Q3 2020/21 (Q3 2019/20: DKK 85.9 million). The gross margin decreased to 50.4% (Q3 2019/20: 54.2%) primarily impacted by the revenue mix with a significantly lower share of revenue from engineering services and secondarily by the specific product mix as well as temporarily higher component costs with the scarcity in the global electronics industry.
  • Operating performance was impacted by the lower revenue with EBITDA of DKK 10.1 million in Q3 2020/21 (Q3 2019/20: DKK 38.9 million) and EBIT of DKK 3.0 million in Q3 2020/21 (Q3 2019/20: DKK 32.6 million). Earnings in Q3 improved significantly over Q2 and Q1. As in the previous quarters, RTX has continued the cautious management of the capacity cost base (staff costs and other external expenses).
  • Cash flows from operations (CFFO) amounted to DKK 22.1 million in Q3 2020/21 compared to DKK 48.2 million in Q3 2019/20 due to the lower earnings compared to last year.

    • SUMMARY FOR THE FIRST NINE MONTHS (9M) OF 2020/21

  • Net revenue decreased by 32.3% to DKK 270.4 million in 9M 2020/21 (9M 2019/20: DKK 399.5 million). As expected and as communicated in the outlook for 2020/21, revenue was significantly impacted on the demand side by COVID-19 especially in the Enterprise and ProAudio segments. Also, revenue in Q2 and Q3 was adversely impacted by supply chain challenges related to component scarcity postponing revenue of approx. DKK 40 million into Q4. In 9M 2020/21, Enterprise segment revenue decreased 36.6% to DKK 176.2 million, ProAudio segment revenue decreased 28.6% to DKK 66.4 million, while Healthcare revenue decreased 2.4% to DKK 27.8 million. Especially the Enterprise segment has seen revenue postponed from 9M into Q4 of this year due to the supply chain challenges. FX corrected revenue development amounted to a decrease of 26.4% as revenue compared to last year was negatively impacted by the weaker US dollar.
  • Due to the lower revenue, earnings decreased with EBITDA of DKK -12.7 million (9M 2019/20: DKK 71.7 million) and EBIT of DKK -33.6 million (9M 2019/20: DKK 54.6 million). Throughout the first nine months of 2020/21, RTX has maintained a cautious management of capacity costs which are slightly below last year’s level.
  • Cash flow from operations (CFFO) amounted to DKK 32.0 million in 9M 2020/21 (9M 2019/20: DKK 78.4 million).

    • OUTLOOK FOR 2020/21

  • As stated in previous RTX financial reports, uncertainty regarding actual developments in 2020/21 is higher than in recent years. With the current knowledge and visibility RTX maintains the expectations for the year as revised on 22 April 2021 with revenue of DKK 450-500 million, EBITDA of DKK 30-55 million and EBIT of DKK 0-25 million for the financial year 2020/21.
  • Since announcing the revised expectations for the 2020/21 financial year in April, demand has improved as expected compared to earlier in the year and now demand in itself supports a revenue performance in the top end of the announced expectations â€" before the impact of supply chain challenges and component scarcity. The demand increase is especially seen in the Enterprise and ProAudio segments which have been impacted the most by COVID-19 so far in the financial year. Therefore, the order backlog for Q4 of 2020/21 is the highest ever for a quarter in the history of RTX. However, the situation with component scarcity in the global electronics industry and other global supply challenges persists and will also impact Q4 of 2020/21 and thus continues to create a larger than normal uncertainty around the outlook for the financial year. The exact timing of the receipt of components will impact the exact timing of production and thus of delivery around the end of the financial year, thereby creating this larger than normal uncertainty.
  • In summary, the outlook thus assumes that the impact of component scarcity and supply chain challenges on revenue in Q4 of 2020/21 (by postponing revenue from Q4 2020/21 into Q1 2021/22) is not larger than the amount of revenue which was postponed from Q3 2020/21 into Q4 2020/21.

    • SHARE BUY-BACK PROGRAMME CONTINUING

  • In line with the updated policy on capital structure communicated in the annual report for 2019/20 and as announced in company announcement 38/2020, RTX continues to execute a share buy-back programme for an amount up to DKK 50 million during the period 25 November 2020 to 30 September 2021.

    • RTX A/S

    PETER THOSTRUP        PETER RØPKE
    Chairman                        President and CEO

    Investor and analysts conference call
    On Tuesday, 24 August 2021 at 15.30 pm, RTX will hold a conference call for investors and analysts hosted by Danske Bank. In this conference call, the Company’s management will comment on the interim report for the third quarter and first nine months of the financial year 2020/21. To register for the conference call, please e-mail vonh@danskebank.dk.

    Enquiries and further information:
    CEO Peter Røpke, tel +45 96 32 23 00
    CFO Morten Axel Petersen, tel +45 96 32 23 00
    RTX’s homepage: www.rtx.dk

  • RTX CA No 46-2021 â€" 23.08.21 â€" Interim Report Q3 2020-21

    • RTX A S

    RTX A S

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