Electrolux Professional AB (ECTXF) Q2 2024 Earnings Call Transcript Highlights: Record Revenue and Improved Margins

Electrolux Professional AB (ECTXF) reports highest quarterly revenue and significant EBITDA margin improvement in Q2 2024.

Summary
  • Revenue: SEK3.2 billion for Q2, highest reported quarter.
  • Rolling 12-Month Sales: Above SEK12 billion for the first time.
  • EBITDA: Increased from SEK385 million to SEK410 million.
  • EBITDA Margin: Improved from 12.2% to 12.5%, excluding integration costs close to 13% (12.8%).
  • Operating Cash Flow: Close to SEK400 million, despite lower than last year.
  • Order Intake: Increasing compared to the same period last year.
  • Food and Beverage Organic Decline: 4.3%, mainly in the South Pacific area.
  • Laundry Organic Growth: 6.7%, with Q2 sales above SEK1.2 billion.
  • EBIT Margin: Improved from 12.2% to 12.3%, excluding integration costs up to 12.7%.
  • Net Debt to EBITDA Ratio: 1.9 times, stable compared to March.
  • Dividend Payment: SEK230 million paid in the quarter.
  • Acquisition Costs: SEK240 million related to Adventys acquisition.
  • Earnings Per Share: SEK0.86, lower than last year due to higher interest costs and taxes.
Article's Main Image

Release Date: July 19, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Sequential improvement in business performance compared to Q1.
  • Total sales increased, partly due to acquisitions.
  • EBITDA margin improved from 12.2% to 12.5%, excluding integration costs.
  • Strong order intake growth compared to the same period last year.
  • Laundry segment showed significant organic growth of 6.7%.

Negative Points

  • Organic sales declined by 0.7% in Q2.
  • Operating cash flow was lower compared to the same quarter last year.
  • Geographical performance was mixed, with declines in APAC and the Middle East and Africa regions.
  • Food and beverage segment saw a 4.3% organic decline, particularly in the South Pacific area.
  • Higher finance net costs due to additional borrowing for acquisitions.

Q & A Highlights

Q: On the order intake growing in July, excluding the Middle East, do you see any relief on the institutional side in Europe? Is that still weak going into Q3?
A: We see a sequential improvement in the institutional side, but the market remains relatively weak in the US. However, the chain side is showing a clear sequential improvement in order intake and sales.

Q: Have you seen any cancellations or withdrawals from the order book?
A: No, we haven't seen any cancellations. There have been some postponements due to site readiness issues, but no order cancellations.

Q: Can you provide an update on the integration costs versus the synergy costs with the acquisitions?
A: The majority of the integration costs were incurred in Q1, with SEK8 million in Q2. We expect some integration costs in the second half of the year, mainly related to aligning processes and IT infrastructure. Synergies will start to materialize in 2025.

Q: What is the expected delta in integration costs for H2?
A: The delta will still be negative in the second half of the year, roughly one-fifth of the SEK50 million incurred in the first half.

Q: What are the expected synergies in 2025?
A: We are not disclosing specific numbers, but Adventys is already accretive. TOSEI is expected to align with group margin expectations by 2025, with a long-term target of 15%.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.