Asetek A/S

Earnings Release • Aug 3, 2022

Asetek - Updates on Full Year 2022 Guidance and Operational Developments

Asetek - Updates on Full Year 2022 Guidance and Operational Developments

Aalborg, Denmark - August 03, 2022 - Asetek A/S today provided an update to its

full-year 2022 revenue and operating income expectations and on recent

operational developments:

· Full-year guidance temporarily suspended due to reduced visibility on OEM

customer and end-user demand for Gaming & Enthusiast products as rising

inflation and interest rates add to a continued uncertain and challenging

business climate

· Organizational rightsizing implemented to reduce operating costs and improve

efficiency

· Allocating resources to accelerate SimSports product development

· Preliminary second quarter revenue of $17 million and operating income of $0

million

Rising inflation and interest rates have recently added to the continued impact

of pandemic lockdowns, supply chain disturbances and general geo-political

tensions, delaying a normalization of the business climate. The effects are

reduced discretionary consumer spending with decreased demand for the Company's

Gaming & Enthusiast products. In addition, the Company experiences reduced

visibility, caused by significantly increased volatility, in the forecasts

provided by OEM customers for the second half of the year.

Due to the increased uncertainty, the Company has suspended its revenue and

operating income guidance for 2022, beyond that revenue and operating income

will likely be below previously communicated expectations. Previous guiding

framed a revenue development in the range between a 5% decrease and 15%

increase, and operating income in the range from -$1 to +$5 million. The Company

will resume guidance when it has a more certain basis for providing full-year

expectations.

"Inflation and rising interest rates are directly affecting demand and adds to

the lingering headwinds and supply chain disturbances created by shutdowns in

China, shipping bottlenecks and the invasion of Ukraine. The weaker market

outlook and probable OEM inventory reductions for our Gaming & Enthusiast

products has led to reduced visibility going forward and our decision to

temporarily suspend guidance," said André Sloth Eriksen, CEO and founder of

Asetek. "Despite being part of an industry with volatile markets and varying

visibility, Asetek has over time provided guidance to ensure transparency around

future expectations. In the current extraordinary environment, we need to be

transparent when it comes to the shorter-term uncertainty related to our full

-year 2022 numbers. We do however expect to make a loss this year, leading us to

optimize our cost base as announced today", Sloth Eriksen added.

To reduce costs and drive efficiencies, the company has laid off 52 full-time

employees in Asia, the US and Denmark, with an expected annual cost reduction of

$4 to $5 million with full effect during the second half of the year. The staff

reduction affects all business segments. The company does not expect to book any

material related non-recurring costs.

As SimSports and Gaming & Enthusiast end customers largely are part of the same

population, the temporary decrease in demand is experienced in both businesses.

The company has limited ability to impact its Gaming & Enthusiast OEM customers'

enduser demand and inventories, but possibly a stronger ability to impact the

customers in the SimSports segment. As such, Asetek has allocated development

resources from that segment to SimSports to accelerate product development. The

company aims to expand its product program with several new products such as

pedals, wheelbases and steering wheels later in 2022 and in 2023. This follows

the positive market reception of the Invicta and Forte sim racing pedal sets

launched earlier this year.

"The continued logistics, component and COVID-19 issues also had a negative

impact on our SimSports revenue this year. On top of this, end-user demand has

temporarily softened. We fully expect this to recover despite the overall market

challenges that everyone currently is facing. Asetek continue to receive strong

end-user feedback and acclaim from the sim racing community which is reflected

in real incoming orders. We now see an opportunity to accelerate product

development within SimSports as we move towards becoming a next-level immersive

gaming experiences provider," said André Sloth Eriksen.

The Company will release its second quarter and report for 2022 on August 11.

Preliminary figures indicate second quarter revenue of $17 million and operating

income of $0 million.

For questions or further information, please contact:

CEO and Founder André S. Eriksen, +45 2125 7076, email: ceo@asetek.com

CFO Peter Dam Madsen, +45 2080 7200, email: investor.relations@asetek.com

About Asetek:

Asetek (ASTK.OL), a global leader in mechatronic innovation, is a Danish garage

-to-stock-exchange success story. Founded in 2000, Asetek established its

innovative position as the leading OEM developer and producer of the all-in-one

liquid cooler for all major PC & Enthusiast gaming brands. In 2013, Asetek went

public while expanding into energy-efficient and environmentally friendly

cooling solutions for data centers. In 2021, Asetek introduced its line of

products for next level immersive SimSports gaming experiences. Asetek is

headquartered in Denmark and has operations in China, Taiwan and the United

States.

This information is considered to be inside information pursuant to the EU

Market Abuse Regulation and is subject to the disclosure requirements pursuant

to Section 5-12 the Norwegian Securities Trading Act. This stock exchange

release was published by Peter Dam Madsen, CFO at Asetek A/S, on August 03, 2022

at 20:30 CEST.