Abnormally high order backlog to support growth
C-RAD delivered a strong report, with sales growing 36% organically, and 26% above our expectations, driven by strength across all regions. Most notably, APAC managed to grow by 64% y-o-y, and the reopening of China played a large role. Profitability was also strong, largely driven by the higher sales; EBIT was 6.4m, while we expected a loss of 5.7m. Cost increased notably in 2022 driven by personnel count, but this has now flattened out with no increase in FTEs q-o-q. Orders also outperformed, growing 5% organically in Q1, beating our expectations by 5%. If conditions remain stable, as we expect, C-RAD should be able to convert its large backlog and deliver strong 2023 results. The order backlog to '23e sales is now 1.53x, and compares to an 5Y average of 0.97x, driven by an abnormally strong product backlog with average conversion time of six months. In our view, this supports the 41% organic growth we expect for '23e. This seems to be an inflection point for profitability, as the high volumes with ~65% gross margins should allow for good EBIT drop-through now that opex growth has stalled.
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