Metacon Q1’25 preview: Large-scale orders expected to continue to materialize

Metacon will release its Q1 results on Thursday. We anticipate a significant increase in revenue, primarily driven by the expected recognition of revenue from the large-scale order from Motor Oil. However, given the variable nature of raw material and consumable costs, which are projected to scale up with revenue, we expect profitability will remain negative. In the upcoming report, we look for management’s comments on the progress of the Motor Oil orders, demand-related information and further insight into the company’s financial position.

Revenue expected to be driven by the Motor Oil order

We estimate that Metacon’s Q1 revenue will reach 24.7 MSEK, a strong increase from 7.4 MSEK in Q1’24. This growth is mainly attributed to the anticipated revenue contribution from the Motor Oil order. To our understanding, the first quarter has largely consisted of the design phase of the Motor Oil project, which has been focused on internal work, resulting in relatively low accumulated costs and therefore lower revenue recognition. As we interpret it, the ongoing component manufacturing phase, which is expected to continue until around mid-year, involves significantly higher costs, enabling increased revenue recognition. As a result, we anticipate higher revenues in Q2 and Q3 driven by the Motor Oil order.

In the bigger picture, however, Metacon’s investment story is based on long-term commercial success, so we do not place too much emphasis on reported revenue in a single quarter, which can fluctuate quite heavily due to the project-driven nature of the business. Therefore, we place greater emphasis on the continued progress of the Motor Oil project and on the company’s order intake, which we view as a better indicator of overall business development. For Q1, we estimate that order intake amounted to around 120 MSEK, consisting of the add-on order from Motor Oil.

Earnings are expected to remain negative

We forecast that Metacon’s Q1 EBITDA and EBIT will remain negative at -15.2 MSEK -19.4 MSEK, respectively. According to our estimates, the variable nature of raw material and consumable costs as well as increased operating costs, is expected to offset the benefits of strong revenue growth, resulting in a relatively flat absolute EBITDA development. Given the company's relatively low debt level, our net profit estimate is roughly in line with the operating profit.

From a cash flow perspective, we expect that the negative operating result will continue to put pressure on liquidity. As of the end of Q4’24, Metacon held a cash position of 124.4 MSEK, of which 45.3 MSEK was restricted as collateral for bank guarantees. This position was later strengthened in Q1 by 9.2 MSEK (before issuance costs) through the exercise of the TO1 series warrants. As we have previously communicated, we believe that liquidity will remain tight until June/July 2025, when we anticipate the release of a significant portion of restricted cash tied to previously announced orders. Nevertheless, with two large orders secured and clear visibility on when the restricted capital will be released, we believe that Metacon should be able to secure short-term project financing on reasonable terms, if needed.

We would not be surprised to see more cautious comments around targets

While Metacon does not provide financial guidance, the company has stated that it is targeting revenues of 500 MSEK and reaching positive cash flow in 2025, which means that Metacon needs to secure one to two similar-sized projects to Motor Oil, according to the company. Our current full-year revenue estimate for 2025 is 277 MSEK, with an EBITDA estimate of -39 MSEK, so we would not be surprised to see more cautious comments around the targets or pushing them forward to, e.g., 2026.

In the upcoming Q1 report, we will be watching closely for updates on the progress of the Motor Oil orders, demand-related information and further insight into the company’s financial position.