Modulight as an investment

[Karhu_Hylje]

@Karhu_Hylje

Could you clarify a bit @Antti_Siltanen why you adjusted that “increase in finished goods inventory” out of EBITDA? Doesn’t that mean the materials and labor hours used to build the inventory are just booked as expenses, while the finished goods are not taken into account at all? Last year the corresponding line was negative, but it wasn’t adjusted.

And what actually are those products made for inventory in Modulight’s case? Are they finished components/devices that can be used in future orders, but aren’t allocated to any specific order yet?

Or is it just an error that you have recorded the quarter’s EBITDA as €0.6M instead of the reported €1M?

EDIT: Looks like an error, since there’s no mention of an adjustment in the report.

And that brings us to the point that with EBITDA at €2.0M this year, it would only rise to €2.1M next year, despite expectations of strong revenue growth and the fact that high-margin pay-per-treatment (PPT) revenue is already at €2M/year. The comments (which should be taken with a grain of salt) also pointed toward more products starting to ship instead of just development projects.

Add to this the reduced financing risks brought by the growth in cash flow, and I certainly see Modulight’s situation as considerably more positive than at any point over the last couple of years. Of course, this remains very sensitive to business fluctuations, and the risks in both directions are high.