DGAP-News: paragon confirms growth course with jump in sales

paragon confirms growth course with jump in sales

- Group revenues increase by 25.4% to EUR 43 million in the first quarter

- EBITDA grows by 57.7% to EUR 7.6 million

- EBIT rises to EUR 2.0 million; EBIT margin unchanged at 4.7 percent

- Electromobility strongest growth driver with 150 percent increase in revenues

- Forecast for 2019 confirmed: Revenue growth to about EUR 230 to 240 million with an EBIT margin of about 8%

Delbrück, Germany, May 13, 2019 - The Management of paragon [ISIN DE0005558696] published its results for the first quarter of the 2019 fiscal year today and confirmed its forecast for the current fiscal year.

"Almost without exception, there was negative news for the automotive industry at the start of the new year," says Klaus Dieter Frers, Chairman of the Board of paragon GmbH. "paragon, however, has been able to decouple from this negative trend. We have grown significantly again. Due to the continued good order situation, we confirm our forecast for the full year".

In the first quarter of the current fiscal year, paragon GmbH & Co. KGaA generated Group revenues of EUR 43.0 million (prior year: EUR 34.2 million), which corresponds to an increase of 25.4%. In the Electromobility operating segment, battery systems for use in intralogistics applications were especially responsible for the excellent performance of the business in the first quarter, with growth of 148.8%. The 15.6% growth in the Mechanics operating segment was driven in particular by the ongoing series production of the software-controlled rear spoiler drive technology.

In the Electronics segment, on the other hand, where sales have been stable, development and marketing are increasingly interlinked. This is especially significant for the new development of "EDWIN," which encompasses a hardware module from the Interior unit along with the semvox voice-operated assistant, a purely software solution. This development has allowed paragon to become a technologically leading supplier of digital voice recognition within a relatively short period of time.

Gross profit margin improved

In the first quarter of the current fiscal year, paragon GmbH & Co. KGaA generated a total operating performance of EUR 53.8 million (prior year: EUR 40.5 million). The higher level of other operating income of EUR 3.3 million (prior year: EUR 0.2 million) is primarily the result of foreign currency effects. The inventory of finished and unfinished products increased to EUR 2.1 million (prior year: EUR 1.5 million) and capitalized development costs were rose to EUR 5.4 million as planned (prior year: EUR 4.5 million). The cost of materials increased by 26.6% to EUR 26.2 million (prior year: EUR 20.7 million). This resulted in a material usage ratio (calculated from the ratio of cost of materials to revenue and inventory changes) of 58.1% (prior year 57.8%).

This yielded a gross profit for the first quarter of EUR 27.6 million (prior year: EUR 19.8 million), which corresponds to a gross profit margin of 64.4% (prior year: 57.8%). Personnel expenses rose by 44.3% to EUR 14.6 million (prior year: EUR 10.1 million), due to the increase in personnel over the course of 2018. The personnel expense ratio was accordingly higher at 34.0% (prior year: 29.6%).

In consideration of the relatively low increase of only 11.9% in other operating expenses amounting to EUR 5.4 million (prior year: EUR 4.9 million), an increase of 57.7% was achieved in earnings before interest, taxes, depreciation and amortization (EBITDA), which totaled EUR 7.6 million (prior year: EUR 4.8 million), corresponding to an EBITDA margin of 17.6% (prior year: 14.0%). After increased depreciation and amortization and impairments totaling EUR 5.5 million (prior year: EUR 3.2 million), earnings before interest and taxes (EBIT) improved by 26.3% to EUR 2.0 million (prior year: EUR 1.6 million). The EBIT margin remained stable at 4.7% (prior year: 4.7%). With a virtually unchanged financial result of EUR -1.5 million (prior year: EUR -1.5 million) and deferred income tax receivables of EUR 1.2 million (prior year: EUR 0.8 million income taxes), the paragon Group generated a consolidated income of EUR 1.7 million (prior year: EUR -0.6 million) in the reporting period. This corresponds to earnings per share of EUR 0.31 (prior year: EUR -0.01). Minority interests accounted for EUR 0.3 million of consolidated income (prior year: EUR -0.6 million).

Total assets were virtually unchanged at EUR 360.8 million as of March 31, 2019 (December 31, 2018: EUR 362.3 million). While noncurrent assets increased by EUR 14.3 million to reach EUR 191.0 million (December 31, 2018: EUR 176.7 million), current assets decreased by EUR 15.8 million to EUR 169.9 million (December 31, 2018: EUR 185.6 million).

The increase in noncurrent assets is primarily the result of the EUR 11.4 million increase in property, plant and equipment to EUR 61.9 million (December 31, 2018: EUR 50.5 million) due to the new IFRS 16 accounting standard.

The development of current assets was primarily caused by two counteractive effects. While inventories increased by EUR 10.0 million, particularly as a result of the planned expansion of production in the Electromobility operating segment to EUR 68.9 million (December 31, 2018: EUR 58.9 million), liquid assets decreased by EUR 24.4 million to EUR 17.5 million (December 31, 2018: EUR 41.8 million) primarily as a consequence of the expansion of operational business activities and the reduction of short-term loans and trade payables.

Equity increased by EUR 1.8 million to EUR 179.6 million as of the balance sheet date (December 31, 2018: EUR 177.8 million). This caused the equity ratio to increase to 49.8% (December 31, 2018: 49.1%).

Noncurrent provisions and liabilities increased by EUR 4.2 million to EUR 104.3 million (December 31, 2018: EUR 100.1 million), which was caused primarily by the increase in noncurrent liabilities from finance leases of EUR 5.7 million to EUR 6.6 million (December 31, 2018: EUR 0.9 million).

Stable cash flow

At EUR -8.5 million, cash flow from operating activities during the reporting period remained at essentially the same level as the same quarter in the prior year (prior year: EUR -8.1 million). While the depreciation and amortization of noncurrent assets increased by EUR 2.2 million to EUR 5.3 million as expected, trade receivables decreased by EUR 0.7 million (prior year: increase by EUR 7.1 million). As a result of the expansion of business activities, inventories grew to a higher extent than in the prior year, at EUR 10.0 million (prior year: 7.8). Trade payables decreased by EUR 5.0 million, after having increased by EUR 3.9 million in the prior year.

Cash flow from investment activity increased in the period under review by EUR 3.9 million to EUR -12.3 million (prior year: EUR -8.3 million), which is mainly due to the EUR 5.6 million higher payments for investments in property, plant and equipment, which totaled EUR 6.9 million (prior year: 1.2).

Cash and cash equivalents totaled EUR 17.5 million as of the end of the reporting period (December 31, 2018: EUR 41.8 million). Free liquidity totaled EUR 24.4 million (December 31, 2018: EUR 48.9 million).

Forecast confirmed

In view of the continuing good order situation, the Management of paragon expects Group sales of EUR 230 to 240 million and a Group EBIT margin of about 8%. Voltabox AG - which represents the Electromobility operating segment - is expected to once again make a particularly strong contribution to the Group's growth, with projected revenue of EUR 105 to 115 million and an EBIT margin of 8% to 9%. Voltabox's strong growth stands to make paragon less dependent on economic factors in the automotive sector even over the medium and long terms while expanding the customer base.

FREP random audit completed at Voltabox

The German Financial Reporting Enforcement Panel (FREP) subjected the consolidated financial statements of Voltabox AG as of December 31, 2017, and the combined management report for the 2017 fiscal year, to an audit pursuant to Section 342b (2)(3)(3) of the German Commercial Code (HGB) (random audit) and identified a need for corrections. Since this also had an effect on the paragon Group consolidation, we already had adjusted the corresponding previous year values in the consolidated financial statements of paragon GmbH & Co. KGaA as of December 31, 2018, and in the combined management report for the 2018 fiscal year and explained them in greater detail in the notes. These balance sheet corrections are based on one-off effects, do not result in an outflow of funds and also have no tax consequences. The 2017 HGB financial statements are free of errors. There are no effects for the current financial year or future financial years.

The final findings of the FREP on the paragon consolidated financial statements 2017 have been available to us since May 6, 2019. We have not lodged an objection, so we expect to publish the relevant BaFin decision in the coming weeks.

The company's Group interim report as of March 31, 2019 - 1st quarter is available for download at https://www.paragon.ag/.

Profile: paragon GmbH & Co. KGaA

paragon GmbH & Co. KGaA (ISIN DE0005558696), which is listed in the regulated market (Prime Standard) of the Frankfurt Stock Exchange, develops, produces and distributes forward-looking solutions in the field of automotive electronics, body kinematics and e-mobility. As a market-leading direct supplier of the automotive industry, the company's portfolio includes the Electronics operating segment's innovative air-quality management, state-of-the-art display systems, connectivity solutions, high-end acoustic systems and digital assistant systems. In the Mechanics operating segment, paragon develops and produces active mobile aerodynamic systems. With Voltabox AG, a subsidiary that is also listed on the regulated market (Prime Standard) of the Frankfurt Stock Exchange, the Group is also active in the rapidly growing Electromobility operating segment with its cutting-edge lithium-ion battery systems developed in-house.
In addition to the company headquarters in Delbrück (North Rhine-Westphalia, Germany), paragon GmbH & Co. KGaA and its subsidiaries operate sites in Suhl (Thuringia, Germany), Neu-Ulm, Nuremberg and Landsberg am Lech (Bavaria, Germany), Korntal-Münchingen and St. Georgen (Baden-Württemberg, Germany), Bexbach and Limbach (Saarland, Germany), Aachen (North Rhine-Westphalia, Germany) as well as in Kunshan (China) and Cedar Park (Austin, Texas, USA).
Additional information about paragon can be found at https://www.paragon.ag/.

Financial Press & Investor Relations Contact

paragon GmbH & Co. KGaA

Dr. Kai Holtmann
Artegastrasse 1
33129 Delbrück, Germany
Phone: +49 (0) 52 50 - 97 62-140
Fax: +49 (0) 52 50 - 97 62-63
Email: investor@paragon.ag