The Cleanspace Holdings Ltd (ASX: CSX) share price is storming higher today following a positive trading update.
Shares in the respiratory protection equipment provider jumped to as high as $6.80 in opening trade. While shares have since retreated, the Cleanspace share price is still up 12% to $6.50.
In comparison, the All Ordinaries Index (ASX: XAO) is 0.2% lower to 6,639 points.
Let’s take a closer look at what Cleanspace announced today.
Trading update
According to the release, CleanSpace advised that business performance remains strong across key geographical areas in healthcare and industrial sectors. Its product sales mix is 77% healthcare and 23% industrial, and the company reports that geographical sales are evenly split between North America, Europe, and Asia Pacific.
The United States healthcare market saw continued growth in its VA, Sutter and Parkview hospital groups. The company reported that new deployments to community health services and a large dental group also supported its direct sales model.
In Europe, the company has been busy providing personal protection equipment and offering healthcare services. This is due to the second wave of COVID-19 that has locked down the United Kingdom, Germany, France and Spain. Cleanspace built an industrial base in Europe, in which it sees attractive growth opportunities.
Across the Pacific, Australia and Singapore saw demand stabilise with purchases for protection considered for the long term. In Japan, Philippines and Indonesia, strong sales are continuing to flow.
Operations update
Cleanspace said it has set up production teams at its new facility, and remains on track to ramp up operations. It expects the facility to deliver over $100 million in capacity capabilities per year. In addition, Cleanspace noted that supply chains and outbound logistics are well positioned to respond to global demand.
Upgraded guidance
Up to the end of October, Cleanspace reports that sales have been robust and are tracking well ahead of expectations. The company upgraded its forecast for the first half of FY21 and anticipates revenue to be in the range of $34 million to $36 million.
Furthermore, earnings before interest, tax, depreciation and amortisation (EBITDA) for the full six months is predicted to be between $14 million and $16 million.
Consumable sales are currently 45% of total sales and are broadly in line with the previous year, and the current forecast.
What did management say?
Cleanspace executive director and CEO Mr Alex Birrell commented:
The upgrade in the forecast reflects work done to leverage our existing markets and expand the base with new customers. Deeper market penetration strengthens the business for a post COVID-19 environment and reinforces CleanSpace as best practice respiratory protection that offers significant benefits including higher protection, greater user comfort and cost effectiveness.
While Australia has managed to achieve no new COVID-19 cases and low community transmission, other regions are now experiencing second waves. A vaccine in the market will signal the return of growth in economic markets and industrial sectors where we have consistently seen 30%-40% growth, while the impacts of COVID-19 on hospitals has delivered a permanent change in mindset towards PPE, and protection of healthcare workers, in the hospital setting.
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