Bittium Oyj - Interim report (Q1 and Q3)

Bittium Corporation's Business Review January-March 2024

Bittium Corporation
Interim report (Q1 and Q3)

Bittium Corporation's Business Review January-March 2024

Bittium Corporation, Stock Exchange Release, April 26, 2024, at 8.00 am (CEST+1)


Net Sales and Operating Profit Grew Year-on-Year. Strategy Implementation
Proceeds as Planned.

As of January 1, 2024, Bittium Corporation has started segment-based financial
reporting. This business review is the first report based on the new
segmentation. There are four reportable segments: the company's three business
segments; Defense & Security, Medical, and Engineering Services, and Group
Functions segment.

Unless otherwise mentioned, the figures in brackets refer to the corresponding
period in the previous year.


Summary January-March 2024

  · Net sales were EUR 18.2 million (EUR 14.9 million), representing a 21.5
percent increase year-on-year.
  · The share of product-based net sales was EUR 10.7 million (EUR 8.0 million),
representing 59.1 percent of the net sales (53.7 percent).
  · The share of services-based net sales was EUR 7.4 million (EUR 6.9 million),
representing 40.9 percent of the net sales (46.3 percent).
  · EBITDA was EUR 3.2 million (EUR -1.0 million), representing 17.6 percent of
net sales (-6.8 percent).
  · The operating result was EUR 1.0 million (EUR -3.5 million), representing
5.7 percent of net sales (-23.6 percent).
  · The order backlog was EUR 31.6 million (EUR 25.6 million).
  · Personnel at the end of the period was 513 employees (607 employees).
  · Implementation of the strategy and measures to improve the profitability
company continued as planned.
  · The Finnish Minister of Defence Antti Häkkänen authorized the Finnish
Defence Forces to negotiate and sign a partnership agreement with Bittium.
  · The members of a research and business consortium led by Bittium signed a
framework agreement for indirect industrial cooperation related to the
procurement of F-35 fighter jets with the US Lockheed Martin.
  · Medical device approval schedules in the Medical business, timing of product
deliveries in the Defense business, and customer cost-saving pressures in the
Engineering Services business create uncertainties in the operating environment.


Key Figures January-March 2024

GROUP (MEUR)                                     1-3/2024  1-3/2023
                                                 3 months  3 months
NET SALES                                            18.2      14.9
Change of the net sales, %                         21.5 %   -18.6 %
EBITDA                                                3.2      -1.0
EBITDA, % of net sales                             17.6 %    -6.8 %
OPERATING PROFIT / LOSS                               1.0      -3.5
Operating profit / loss, % of net sales             5.7 %   -23.6 %
RESULT OF THE PERIOD FROM CONTINUING OPERATIONS       0.7      -3.7
EARNINGS PER SHARE (EUR)                            0.019    -0.104

TOTAL R&D EXPENSES                                    4.0       5.6
R&D EXPENSES, % FROM NET SALES                     21.9 %    37.4 %
CAPITALIZED R&D EXPENSES                              1.9       2.1

NET CASH FROM OPERATING ACTIVITIES                    5.2       1.1
NET CASH FROM INVESTING ACTIVITIES                   -2.1      -2.4
NET CASH FROM FINANCING ACTIVITIES                   -0.3      -0.4
NET CHANGE IN CASH AND CASH EQUIVALENTS               2.8      -1.6
CASH AND OTHER LIQUID ASSETS                         11.2      17.4

NET GEARING (%)                                    10.5 %     4.3 %
EQUITY RATIO (%)                                   70.9 %    71.3 %
AVERAGE PERSONNEL DURING THE PERIOD                   514       610
PERSONNEL AT THE END OF THE PERIOD                    513       607

Bittium's CEO Johan Westermarck

The year 2024 started as expected. Net sales grew 21.5 percent from previous
year and were EUR 18.2 million. Net sales grew in the Defense & Security and
Medical Business Segments, however, in the Engineering Services Business
Segment, which provides R&D services, the net sales declined due to the
challenging market situation. Operating result improved and was positive in all
our Business Segments. The results of the measures to improve the profitability
and gain cost savings are reflected in the development of the operating result.

Our goal for the current strategy period is to achieve profitable growth. In the
Defense & Security Business Segment, the multi-year efforts to achieve growth
are progressing and the world's geopolitical situation increases the
opportunities in international markets. Currently, uncertainties in our
operating environment are caused by the schedules of medical device approvals in
the Medical business, timing of product deliveries in Defense business, and
customers' cost-saving pressures in the Engineering Services business. We will
systematically continue to implement our strategy by investing strongly in sales
and improving the operational efficiency.

The first quarter in the Defense & Security Business Segment was good, as
expected. Net sales increased by 40.0 percent from the previous year and was EUR
9.3 million. The increase in net sales was caused by the timing of product
deliveries and the growth of R&D services, as well as by increased sales of
security software and special terminal devices compared to the previous period.

Cooperation with the Finnish Defence Forces continued as planned in the
beginning of the year. The field tests of the Tough SDR radios and preparations
for deployment proceeded as expected, and product deliveries of the tactical
communication system continued as planned. We started the development of a new
IP routing protocol intended for tactical communications of the Defence Forces'
mobile ad hoc networks, enabling unified, even more comprehensive, and flexible
communication network to support real-time situational awareness and effective
command of troops on the battlefield.

After the reporting period, the Finnish Minister of Defence, Mr. Antti Häkkänen
authorized the Finnish Defence Forces to negotiate and sign a partnership
agreement with Bittium for the years 2025-2036. This is a significant milestone
for us, and the aim is to sign the agreement during this year. The partnership
agreement covers command and control systems used by all branches of the Defence
Forces, including Bittium's tactical communications system and related products.
When realized, the partnership agreement will enable systematic planning and
execution of cooperation in a cost-efficient manner that benefits both parties.

In the international defense market, cooperation with our customers proceeded
well. The members of the research and business consortium we lead signed a
framework agreement as part of the indirect industrial cooperation related to
the procurement of F-35 fighter jets with US Lockheed Martin. The three-year
project develops methods and capabilities for spectrum usage, which improves the
ability to form a tactical situational picture also strengthening the data
transmission capacity of our tactical communication systems in even more
demanding combat situations. The responsibility of leading this consortium is a
significant step in the internationalization strategy of the Defense & Security
Business Segment and offers a good starting point for other possible cooperation
projects in the future.

The Windows version of Bittium's encryption software SafeMove Mobile VPN
received national approval for securing data classified nationally as
RESTRICTED. With the approval in place, national authorities can transfer data
classified as RESTRICTED over wireless networks. The sales of security software,
especially for the communication of authorities and secret services, increased
from the previous year. Also, the deliveries of secure Mexsat satellite phones
to our partner in Mexico continued.

The operating profit of Defense & Security Business Segment was EUR 0.5 million,
which corresponds to 5.4 percent of net sales. In addition to the measures taken
to improve the efficiency and profitability, the development of operating profit
was influenced by lower R&D expenses than the previous year.

Net sales of Medical Business Segment grew 36.8 percent year-on-year and was EUR
5.2 million. The increase in net sales was affected by the timing of product
deliveries and the low net sales in the comparison period, which was caused by
the shift of deliveries due to the shortage of components. The demand for ECG
measuring devices in the European market developed weaker than expected and a
significant part of the net sales accumulated from the devices sold to our US
customer.

Medical device approvals for HSAT device Bittium Respiro progressed in different
countries. The requirements of the authorities have increased and therefore the
processes are slower than before. Obtaining official approvals and sales permits
is a prerequisite for customers' own pilots to start.

The pilots of Bittium BrainStatus EEG measuring devices in intensive care units
have continued. Based on the pilots, the product will be further developed to be
better implemented in the operations and systems of intensive care units.

We continued to implement the partnership strategy and expanded the offering of
ECG analysis software to artificial intelligence-based cardiac diagnostic
software.

The operating profit of Medical Business Segment was EUR 0.2 million,
corresponding to 4.8 percent of net sales. In addition to the measures taken to
improve the efficiency and profitability, the development of operating profit
was influenced by lower R&D expenses than in the previous year.

Net sales of Engineering Services Business Segment decreased by 17.9 percent
from previous year and was EUR 3.7 million. The decline was influenced by the
lower number of billable projects compared to the previous year and the weak
order backlog at the end of last year.

Cooperation with our existing key customers has continued well. We completed a
project for our customer, manufacturing smart digital locking systems, and won
new customers from e.g. the electric car charging market.

Due to cost-saving pressures, customers' R&D budgets are under constant scrutiny
which has already caused postponements in the start of some projects. It seems
that the market situation will continue to be challenging throughout the current
year. In the R&D service business, the visibility into the future projects is
very short and fluctuations in the market situation can cause significant
changes in a short time frame.

Despite the decline in the net sales of Engineering Business Segment, operating
profit remained positive and was EUR 0.3 million corresponding to 8.3 percent of
the net sales. The operating result was affected by the measurements implemented
to improve the efficiency and profitability.

Key Figures of the Reportable Segments (with extended comparison data)

Bittium's segment information is based on the group's management structure and
management reporting. The new reporting structure is consistent with how the
company monitors the operational development of its segments. The company does
not follow assets and liabilities by segment.

The financial key figures to be reported for the new segments are presented for
the applicable parts of each segment for the reporting period under review and
the four preceding quarters. The key figures to be reported are net sales,
EBITDA, EBITDA % of net sales, operating result, operating result of net sales,
R&D expenses, capitalized R&D expenses, new orders and order backlog, and the
number of personnel.

Due to the change of the segments in the beginning of the year, Bittium will
publish the comparison data according to the new reporting structure
exceptionally for all quarters of 2023 in this business review. In the future,
comparison figures will only be presented from the corresponding period of the
period under review.

The Group Functions segment includes expenses related to group administration
and listed company administration, as well as to real estate rental operations.
The segment-specific costs of rental operations have been revised for the year
2024, and the rental costs allocated to the business segments will be higher in
2024 than in the comparison periods in 2023.

In connection with the transition to segment reporting, the company has reviewed
and specified the definition and processing of order backlog in its customer
management system. The company's order backlog consists of the undelivered
portion of sales orders. In this report, the company has corrected the order
backlog key figures of the 2023 to reflect the calculation according to the new
process. The company has reported the group's order backlog for the first time
in its 2021 Financial Statement Bulletin.


GROUP ORDER BACKLOG IN 2023 (MEUR)  1Q/23  2Q/23  3Q/23  4Q/23
Corrected order backlog              25.6   23.1   21.3   27.6
Previously reported order backlog    28.7   28.0   25.3   27.6

KEY FIGURES OF THE REPORTED SEGMENTS

DEFENSE & SECURITY BUSINESS SEGMENT, MEUR  1Q/24  4Q/23  3Q/23  2Q/23  1Q/23
NET SALES                                    9.3   16.1    4.8    8.7    6.6
EBITDA                                       1.6    3.2   -1.1    1.0   -1.2
EBITDA, % of net sales                      17.8   19.8  -23.1   11.8  -17.9
OPERATING PROFIT / LOSS                      0.5    2.0   -2.4   -0.2   -2.6
Operating profit / loss, % of net sales      5.4   12.5  -49.1   -2.4  -39.1
R&D EXPENSES                                 1.9    2.8    1.9    3.0    3.2
Capitalized R&D expenses                    -1.3   -1.0   -0.9   -1.5   -1.5
New orders                                  10.2   24.9    2.2    7.6    3.9
ORDER BACKLOG                               18.5   17.5    8.5   11.1   12.3
PERSONNEL AT THE END OF THE PERIOD           230    230    260    263    266

MEDICAL BUSINESS SEGMENT, MEUR           1Q/24  4Q/23  3Q/23  2Q/23  1Q/23
NET SALES                                  5.2    5.3    5.3    7.6    3.8
EBITDA                                     0.7   -0.3    0.6    1.3   -0.8
EBITDA, % of net sales                    13.9   -5.6   10.7   17.7  -20.7
OPERATING PROFIT / LOSS                    0.2   -0.8    0.1    0.9   -1.2
Operating profit / loss, % of net sales    4.8  -14.6    2.0   12.4  -30.6
R&D EXPENSES                               1.5    2.0    1.5    2.0    2.2
Capitalized R&D expenses                  -0.4   -0.4   -0.3   -0.5   -0.6
New orders                                 6.1    3.5    6.7    4.7    8.1
ORDER BACKLOG                              6.4    5.5    7.3    5.9    8.3
PERSONNEL AT THE END OF THE PERIOD          99    107    126    127    124

ENGINEERING-SERVICES BUSINESS SEGMENT, MEUR  1Q/24  4Q/23  3Q/23  2Q/23  1Q/23
NET SALES                                      3.7    4.3    3.8    4.3    4.6
EBITDA                                         0.3    0.3    0.6    0.2    0.6
EBITDA, % of net sales                         8.3    6.3   16.6    3.5   13.3
OPERATING PROFIT / LOSS                        0.3    0.3    0.6    0.2    0.6
Operating profit / loss, % of net sales        8.3    6.3   16.6    3.5   13.2
R&D EXPENSES                                   0.2    0.1    0.1    0.1    0.0
Capitalized R&D expenses                         0      0      0      0      0
New orders                                     5.7    3.5    3.3    5.4    2.4
ORDER BACKLOG                                  6.7    4.7    5.5    6.1    5.0
PERSONNEL AT THE END OF THE PERIOD             128    131    143    151    146

GROUP FUNCTIONS SEGMENT, MEUR            1Q/24  4Q/23  3Q/23  2Q/23  1Q/23
NET SALES                                   NA     NA     NA     NA     NA
EBITDA                                     0.5    0.2    0.2    0.1    0.3
EBITDA, % of net sales                      NA     NA     NA     NA     NA
OPERATING PROFIT / LOSS                   -0.0   -0.5   -0.4   -0.6   -0.4
Operating profit / loss, % of net sales     NA     NA     NA     NA     NA
R&D EXPENSES                               0.4    0.2    0.4    0.4    0.3
Capitalized R&D expenses                  -0.2   -0.1   -0.1   -0.1   -0.0
PERSONNEL AT THE END OF THE PERIOD          56     59     75     75     71

Outlook for 2024

Bittium expects the net sales in 2024 to be EUR 85 - 95 million (EUR 75.2
million in 2023) and the operating result to be EUR 7.0 - 9.5 million (operating
loss of EUR -4.3 million in 2023).

More information about Bittium's market outlook is presented on the company's
internet pages at www.bittium.com.

Risks and Uncertainties

Bittium has identified several business, market, and finance-related risk
factors and uncertainties that can affect the level of sales and profits. The
world's geopolitical uncertainty combined with high inflation, and challenges in
supply chains have caused various risks related to demand and supply and
increased uncertainty. More about the risks and uncertainties are presented at
the company's internet pages at www.bittium.com.


Oulu, April 26, 2024

Bittium Corporation
The Board of Directors


Further Information:

Johan Westermarck
CEO
Tel. +358 40 344 2789 (group communications)

Karoliina Malmi
Vice President, Communications & Sustainability
Tel. +358 40 344 2789


Distribution:

Nasdaq Helsinki
Major media


Bittium

Bittium specializes in the development of reliable, secure communications and
connectivity solutions leveraging its over 35-year legacy of expertise in
advanced radio communication technologies. Bittium provides innovative products
and services, customized solutions based on its product platforms and R&D
services. Complementing its communications and connectivity solutions, Bittium
offers proven information security solutions for mobile devices and portable
computers. Bittium also provides healthcare technology products and services for
biosignal measuring in the areas of cardiology and neurophysiology. Net sales in
2023 were EUR 75.2 million and operating loss was EUR -4.3 million. Bittium is
listed on Nasdaq Helsinki.

www.bittium.com

Attachments:

04258527.pdf