Good morning, and thank you for joining AutoStore's Q1 2022 financial results. My name is Hiva Ghiri, and I'm the Investor Relations Officer at AutoStore. I have the pleasure of hosting this presentation and the subsequent capital markets day from the London Stock Exchange. Consequently, we'll leave the deep dive into our strategy and matters that we typically cover for later on today. I can assure you that we have a very interesting program lined up for you. Please tune in at 2:30 P.M. Central European Time to hear more about the story of the cubic storage pioneers, a pure-play investment leveraged to global megatrends. First, let's focus our attention on Q1.
I'll soon hand over the word to our CEO and President, Karl Johan Lier, who will guide us through the highlights of the quarter before he hands over the word to our CRO, Mats Hovland Vikse, and our CFO, Bent Skisaker. With that, Karl Johan, I'll give over the word to you.
Thanks, Hiva. I'm very proud with the Q1 performance by the team. We delivered another strong quarter with our revenue growth of over 90% and an adjusted EBITDA margin of 44%. The LTM order intake grew by 111.5% to $660 million. Our backlog increased by 129% to an all-time high of $487 million. This provides us with the confidence in our outlook for the full year guidance 2022, and I will come back to that later in the presentation. On the technology side, we relentlessly continue to lead the industry, and with the launch of the R5 Plus, we expand the total addressable market of Red Line. Let me remind you what the R5 Plus offers.
It is a more cost-efficient solution for our customers, making the Red Line able to handle bins up to 425 mm, typically used in applications where you store shoe boxes, semiconductor reels, and other tall products. Moreover, offering the R5+ allows us to reduce the risk of long lead times, as we now rely on a supply chain that is more mature. As mentioned in the last quarterly presentation, we expanded our partner network with a global Element Logic agreement and SmartLog in Latin America during the quarter. This week, we also announced that we are onboarding a new partner in APAC, Doosan Logistics Solutions, or DLS. This brings us up to 22 distribution partners.
Our team also remains focused on our production and sourcing strategy by diversifying our supplier base, inventory optimization, improved collaboration, and increased visibility with suppliers as part of our toolbox. We also know that all of you follow the aluminum development in and the general supply chain situation. While this have some short-term impact on margins, we therefore introduced an aluminum surcharge at end of Q1 on new product, on new orders. The surcharge, combined with the previously introduced price increase, are expected to improve margins in quarter four, with full effect from quarter one, 2023, bringing us to historical adjusted EBITDA levels. With regard to litigation process, nothing material happened since we last met. We have now appealed the ITC decision to the U.S. Court of Appeals, and as for the U.K. trial, this was heard in March, April.
We are waiting for a decision which is expected to come in the June-July timeframe. All in all, we made strong progress during quarter one, and I hand over to Mats to provide some more flavor on the development.
Thanks, Karl Johan. This is really an exciting day for AutoStore, and we really look forward to see all of you in a few hours, where we will provide a deep dive into our strategy and growth opportunities at our CMD. We in AutoStore, we continue to benefit from a huge under-penetrated market with high expected growth rates for fast cubic storage. The expected growth is driven by favorable underlying market drivers, such as the fact that warehouse automation market continues to be very under-penetrated, the changing customer demands where we see same-day delivery as the new normal in urban areas, and we also now see historical low unemployment rates, which is driving up wages significantly and hence also strengthening the case for automation and AutoStore.
In addition to that, we've seen commercial property values growing 21% in the U.S. and 8% in the Euro area, making space-efficient solutions even more important. All this combined makes for strong growth ahead. We have a solution that is well-proven for e-commerce. It's scalable and flexible. It also reduces the dependency on manual labor, and it reduces space by up to 75%. All these factors put AutoStore in the pole position and is fueling the growth story that we'll present at the CMD. It also forms the fundamentals for what I will show on the next slide. We reported an order intake of $160.6 million in Q1 2022 compared with $121.5 million in Q1 2021.
This brings the last twelve months order intake to NOK 660.1 million, representing a growth of 111.5%. This order backlog that we have provides significant revenue visibility for the balance of the year. When we think beyond 2022, we also feel confident. We will talk more about our pipeline later at our CMD, but what we can say is that it has reached $4.8 billion, and this also provides us confidence to the 40% medium-term growth rate. Before handing it over to Bent and the financials, I would like to highlight that 2022 has started off exceptionally well with a revenue growth of 90% year-over-year, really proving our ability to deliver.
As Karl Johan said, the margins are expected to return to long-term historical levels going into Q1 of 2023 as we start to execute on the backlog under new pricing policies. Additionally, we continuously focus on strengthening the supply chain to facilitate high growth also going forward. During the first quarter, we appointed a new COO, whom you'll get the chance to meet at the CMD. We increased capacity with existing suppliers, and we added additional suppliers. Also, we increased inventory levels to be positioned to drive the continued growth. Hence, we reaffirm our 2022 guidance of $550 million-$600 million. Bent, please guide us through the numbers.
Thank you, Mats. Going to the financials, I move into page nine. As Karl Johan and Mats already have stated, we delivered another strong quarter with revenues of $123 million and an adjusted EBITDA margin of 44%. Our last 12 months order intake was very strong at $660 million, which brings us to the record high backlog of $487 million. Going into more details on revenue, I'll go to the next slide, which underlines the growth journey we enjoy. AutoStore, as I said, reported revenue in the first quarter of 2022 of $123 million, which is up by 92% from $64 million in the same period last year.
The development is driven by the factors that Mats just gave an update on, which we also will further address in more detail in the Capital Markets Day later today. The adjusted EBITDA in the first quarter ended at $54 million corresponding to an EBITDA margin of 44%. The decrease in adjusted EBITDA margin mainly relates to the increase in procurement prices, primarily aluminum, further driven by the challenging supply chain situation in the world. If we pro forma adjust the Q1 actuals for the aluminum surcharge introduced in this quarter and the previously announced price increase, the adjusted EBITDA margin would have been around 50%. This is also consistent what we're stating today about the margin improving from Q4 this year with full effect in Q1 2023 as projects move from backlog to realized revenues.
Moving to geographies, the revenues in the EMEA region increased from $36 million in the first quarter last year to $83 million in the same period in 2022, which represents a growth of 132%. The revenue in the North America region increased from $25 million- $27 million in the first quarter of 2022, which is a low growth in the quarter only of 5%. However, order backlog supports strong growth in the region in 2022. Supported by the order intake and new partners added in the APAC region in 2021, revenue in this region increased by almost 5 x to $12.3 million in the first quarter. As stated in our fourth quarter 2021 report, we reiterate revenues in APAC to grow strongly in 2022.
One of our key takeaways today is that the price increase combined with the aluminum surcharge are expected to drive margins back to historical adjusted EBITDA margins when we start 2023. The first quarter 2022 margin is temporarily impacted as we executed on the backlog secured in 2021 at lower price levels. The later price increase introduced in the fourth quarter 2021 and the aluminum surcharge we introduced now in the first quarter are expected to have positive impacts as projects move from backlog to realized revenues toward the end of this year and going into 2023. Importantly, we see continued high demand, which really demonstrates our competitiveness. This important slide supports our revenue guidance.
As we see here to your left, the last twelve months order intake grew by 111% from $312 million in the first quarter last year to $660 million in the first quarter of 2022, which is driven by the market fundamentals which was outlined earlier in the presentation. The order backlog increased to $487 million at the end of the first quarter compared to $212 million at the end of the corresponding period last year. This represents a year-over-year growth of 129%. To repeat the obvious, the order backlog levels provide significant revenue visibility. As you know, we also had significant costs related to various topics as the Ocado litigation and costs related to the IPO last year.
Consequently, we are providing a breakdown of the different costs that to a very large extent has a one-time character. Coming into the first quarter, 2022, what is clear is that the only noteworthy adjustment is related to the litigation costs pertaining to the ongoing Ocado litigation. Beyond litigation costs in the short term and more moderate levels of option costs, the adjustment items cease in 2022. The adjusted EBITDA is also an important supplemental measure for our investors to get the overall picture of profit generation in our operating activities. For a full P&L balance sheet and cash flow, please see the full board of directors report, which we announced at 6:00 A.M. CET this morning, providing an in-depth discussion of the consolidated IFRS accounts.
Note that adjusted EBITDA is an alternative performance measure and that you will find additional information to the IFRS financial statements as a part of the APM section in the financial report on pages 29 and 30. To summarize the first quarter, we delivered another strong period with revenues of $123 million and ended the quarter with an impressive backlog of $487 million, which provides great confidence in our 2022 guidance. In addition, we expect the margins to return to historical levels going into 2023. Thank you for spending this morning with AutoStore. Now I give the word back to Karl Johan Lier, who will wrap up and open up for Q&A. Thanks.
Thank you, Bent. As we presented today, AutoStore is in a fast-growing market. Even though more and more warehouses are automated, only about 15% of the market is automated today, leaving plenty of space for growth and increased demand for automation. Beyond litigation costs in the short term and a more moderate level of option cost, the adjustment items cease in 2022. In addition, AutoStore is an investment into global mega trends, which we will spend the entire afternoon to outline as our Capital Markets Day at London Stock Exchange. The continued growth and performance in the quarter highlights the momentum for AutoStore with strong demand across regions and markets and various categories. Despite the current tight market situation for certain parts and materials, we are confident in our ability to deliver solutions to sustain the revenue growth.
While this situation has some short-term impact on margins, the introduced price increase and aluminum surcharge combined are expected to lift the margins to a historical level of approximately 50% going into 2023. Our team also remains focused on our production and sourcing strategy of reducing dependencies on individual suppliers with inventory optimization, redundancy, improved collaboration, and increased visibility with suppliers as part of our toolbox. Over to the revenue ambitions for 2022. With the 2021 performance as tailwind on top of our proven expansion strategy, we see significant opportunities for growth going forward. Additionally, the record high order backlog provides significant revenue visibility and strong support for our revenue guidance. Consequently, we are confident in our 2022 revenue guidance of $550 million-$600 million.
While the tight market situation is expected to continue impacting margins in the short term, we expect introduced price increase and aluminum surcharge combined to lift the margin towards historical levels going into 2023. As we say in AutoStore, the best is yet to come. Our growth journey has just begun. Thank you for participating this morning, and now we are opening up for questions.
Thank you, Carl Johan. Thank you, Mats and Bent. We will now open up for Q&A. We'll start with our participants on the conference call. Operator, can you please open up the line and start with the questions?
Thank you. Ladies and gentlemen, if you have questions for the speakers, please press five star on your telephone keypad. To withdraw your question, please press five star again. We will have a brief pause while questions are being registered. The first question is from the line of George Featherstone from Bank of America. Please go ahead, your line will now be unmuted.
Hi. Morning, everyone. Thanks for taking the questions. Firstly, I'd just like to take a look at the order intake, which although grew strongly again in Q1, it did show some sequential slowdown. We've also heard from one of your distribution partners about slowing investment decisions in warehouse automation projects. Firstly, I'd just like to understand how much of the demand that you saw in Q1 was influenced by the price increases that you put through in Q4, and also the aluminum surcharges. What I mean by that is, was there any pull forward in demand in Q4 that has influenced Q1 order intake? Then if there's any indication from customers that you're actually seeing a slowing in pace of investment in warehouse automation. Thank you.
Mats?
Yeah. I think the order intake that we are delivering in Q1 is very strong coming out of the strong Q4 that we had. As we also mentioned after the Q4 report, there was sort of some accelerated decisions being made in Q4. Yes, Q4 intake was positively impacted by the price increase, and hence Q1 is very strong. We continue to see strong demand, and we are not experiencing any slowdown due to any macro environment. What we are seeing is that what's happening in the world now with higher wages, lower unemployment rates, and the fact that real estate costs are going up significantly, the business case for automation and AutoStore is strengthened, which offsets the relatively speaking slower growth that we're seeing in e-commerce overall. We are seeing strong leading indicators also on the demand side.
Okay. Thank you. I mean, I guess given that you're reiterating medium-term revenue growth of over 40% or 40% per annum, that the order intake for the rest of this year in terms of growth must be over that anyway. Can you maybe also talk about the growth that you also saw in April?
I think generally what we can say is that we see continued strong demand, and there was no change in that in April compared to what we saw in quarter one, I would say.
Okay. Just to clarify, the level of order growth was the same in April as it was in Q1?
Yes. Continued strong demand into April as well.
Okay. Thank you very much.
The next question is from the line of Stacy Pollard from JP Morgan. Please go ahead. Your line will now be unmuted.
Thank you very much. Thanks for taking the questions. Congratulations on a good quarter. Three questions from me. First of all, just a quick could you deep dive a little bit on North America? It seemed a bit weaker in revenues in terms of, you talked about the timing of delivery. Maybe a little bit more on what caused that and when it recovers. Is that Q2 or later in the year? That was question one. Number two, on margins, you say some impact in Q4 or some positive impact coming through in Q4. Does that mean we should be modeling sort of 44% throughout Q2 and Q3, and then a slight uptick in Q4, and then going back towards the 50% in early 2023? Is that the way I should think about that progression?
The third question, just litigation with Ocado, it sounds like not doing much or there's not a lot going on until the U.K. Decision. Should we factor in lower litigation costs in Q2? Of course, I asked this in the past, but do you think once this U.K. decision is done, do you think it puts both companies in a better position for like a broader settlement across geography?
The first question, what was that?
Yeah. I can address the first question. In terms of U.S., this is all about timing. At the end of the day, we're selling AutoStore partners who deliver projects. As we've talked about before, there can be some lumpiness quarter to quarter. The order intake that we've seen and the backlog we have suggests that the U.S. will continue to be very strong throughout 2022. This is only a timing issue.
Yeah. To the margin question.
Yeah.
As we're executing on the backlog from before the price increase, mainly in the second and the third quarter, then we will have the same kind of supply chain cost profile through those two quarters, and thus margin level comparable to Q1, as you refer to. Also, as you correctly refer to, there will be some uptick in Q4 since then the price increase we implemented in Q4 last year will have effect. As also you correctly indicated, we will be back on the margin levels we have seen historically from the start of 2023, when also the surcharge will have effect. To the Ocado litigation costs.
There was a high activity in Q1 and also into Q2 as the court case in the UK also went into April. As it looks now, Q1 and Q2 will be slightly on a higher activity level than Q3 and Q4. However, as we always have said, when it comes to this litigation case, it's difficult to precisely predict how it develops and we will do what we need to do in this respect.
To the question about after the U.K. decision about a potential settlement with Ocado. What we have said in that connection is that we are not a litigation company. If there is possibilities to find a settlement that is good for both parties, we will of course discuss.
Okay, thank you. Thanks, and looking forward to the CMD. Thanks.
The next question is from the line of Katie Self from Morgan Stanley. Please go ahead. Your line will now be unmuted.
Good morning. Thank you for taking my questions. I've got two, if I could. The first one was just around cash and whether you could give us a bit more color on the cash flow from operations line, which I see was impacted by some tax payments related to options and some IPO costs. Just in terms of phasing going forward, should we think about those types of cash charges phasing along with your commentary on the adjustments to EBITDA, as in should those be completed by the end of 2022? That's question one. Then the second one was just around the aluminum surcharge, whether you could give us any more details on the level of that. You know, it says it's temporary, the duration, the terms that are involved there. Any color would be helpful. Thanks.
When it comes to the cash development in this quarter, that was extraordinary payouts of expenses which was related to the IPO. There were IPO-related costs, and there were taxes withheld and Social Security tax payable for exercise of options. This was reflected in a high level of payables and provisions in Q4. As these were paid in the first quarter in 2022, we had this extraordinary negative operational cash flow.
Going forward, we will not see these effects, and as I also will come a bit back to in the Capital Markets Day later today, we will see that the net working capital level over time will be, as a main rule, 15% of last twelve months revenues, as we guided on in the IPO process. However, since we are in a special supply chain situation, we invest somewhat more into supply chain and our inventory levels. Maybe in the short run, this 15% of last twelve months revenues will be a couple of percentage points higher.
In terms of the aluminum surcharge, that's a surcharge that we are adding specifically to the grid parts of our delivery, and that can be up to 30%, and it's only included on new orders placed from the time we implemented the surcharge, which was end of Q1.
Great. Thank you very much.
The next question is from the line of Martin Wilkie from Citi. Please go ahead. Your line will now be unmuted.
Thank you. Good morning. It's Martin from Citi. My first question was on the mix of products. I mean, you obviously unveiled the R5 plus robot. You've not talked so much about the Black Line recently. If we could just get some sense as to the mix of your order intake. Has the Black Line effectively been overtaken, if you like, by the R5, just to sort of understand what's driving the order growth? That'd be the first question. Thank you.
Yeah. We've always had this simple product positioning strategy saying that if Red Line are able to meet the requirements of the end customer, that is the more economical choice and hence also bringing the highest ROI to the end customer. What we've seen is that the R5 plus is able to meet demand of most end customers together with the Router software. Also those situations where previously the Black Line was the obvious choice. We've already sold projects with the R5 plus, and we expect that Red Line will continue to be the meaningful part of our business also going forward.
Thanks. That's helpful. A second question, just to come back to the point on aluminum. We know obviously aluminum is elevated on a sort of 12-month or 24-month view, but it has rolled off slightly recently. Presumably surcharges are entirely asymmetric, so if aluminum was to roll over, the purpose of this is to effectively protect your gross margins so there's no, you know, no sort of benefit that you then receive if aluminum prices were to fall.
Did you understand?
Yes. There is obviously some timing aspects related to the surcharge as well, given that we're not implementing it on all deliveries from now, but all orders placed from now, and we're maintaining that surcharge also at current levels. We'll continue to monitor the situation as we've done up until now.
Okay. Thanks very much.
As a reminder, please press 5 star on your telephone keypad to ask a question. The next question is from the line of Eirik Rafdal from Carnegie. Please go ahead. Your line will now be unmuted.
Yes, hi, everyone, Eirik from Carnegie here. Thanks for taking my question. A lot have been covered, but just a quick question on the contract structure. You know, you seem pretty positive on the demand side, despite some broader e-commerce becoming a bit more cautious. Is there any risk at all in the backlog that end customers could, you know, pull out of contracts or scale them down and/or postpone them or is that 100% set in stone?
I can start, and then you can elaborate, Mats. Generally what we see is that there is very little adjustments really to the backlog historically, also in times where there is more pressure on supply chain, et cetera. I will also say that for us, at this stage, we have much more fixed backlog than we ever had really. I think we are in a much better position in that connection than in a normal situation, I would say. Anything you will add?
Yeah. To comment on the contract structure, so it's our partners that own the contracts with the end customers, while our deliveries are regulated by our standard distribution contracts to our partners.
That's very clear. Thank you. Mats, I think you mentioned the pipeline as well of $4.8 billion. Maybe that's a question better saved for the CMD later. Will you later go into a bit more detail on geographies and across use cases, et cetera, or could you give a bit more color on that now?
Yeah. We continue to see the pipeline being highly diverse across regions, across end markets, and also across different types of warehouses, i.e., micro-fulfillment segment, high-throughput warehouses, and standard warehouses. We will share some more color on it on the CMD, but the high level is that it continues to be very diverse.
That's great. Thank you so much. That was all my questions.
As there are no further questions at this moment, I will now hand the word back to the.
Ready, I'll go ahead. First one is from Øyvind Mossige : How big share of the backlog is 100% signed, and how much is estimated?
A very big share of the backlog is what Carl Johan referred to as hard backlog. We don't do any estimations as such in our backlog. It's all linked to real designs with, kind of, real values to it. It's strong, and it's relatively stronger than what it's been in historical terms.
Thank you, Mats. We have one more question, and it relates to the litigation, and you already touched upon it, Bent. The question is from Daniel Haugland. Why did the cost go from NOK 5 million on average in Q1 2022 to NOK 11 million in Q1 2021 and to NOK 11 million in Q1 2022? What's the reason for the doubling?
The point on that one is that we are in the middle of a litigation. In the quarter one of 2021, we were in the start phase really. 2022 quarter one, we had a lot of activity, especially on the U.K. litigation but also on the ITC litigation.
Thank you, Karl Johan Lier. That actually concludes the questions from the web audience, and there are no more questions from the callers either. With that, we'll thank you all for joining us at our first quarter 2022 results, and we really look forward to seeing you all at our Capital Markets Day later on today at 2:30 P.M. Central European Time, 1:30 P.M. local time, here at the London Stock Exchange. Thank you, and bye.