Release Date: May 19, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Stratec SE (XTER:SBS, Financial) reported a significant improvement in margins, with the adjusted EBIT margin increasing by 250 basis points to 19.1%.
- The company achieved a strong cash flow from operating activities, increasing by 152% to EUR48.7 million.
- Stratec SE exceeded the higher end of its guidance range for 2024 regarding adjusted EBIT margin, which was between 10% to 12%.
- The company successfully renegotiated some long-term supply agreements, which is expected to positively impact future cash flows.
- Stratec SE is well-prepared for deglobalization with a strong presence in the United States and Europe, and is establishing a manufacturing site in Asia.
Negative Points
- Sales decreased by 4.7% compared to the previous year, primarily due to the application of new accounting principles.
- The company faced delays in its full-year disclosure due to the rotation of its balance sheet auditor and a routine Bafin audit.
- Stratec SE is experiencing elevated inventory levels, which are still too high due to long-term supply agreements made during the COVID-19 pandemic.
- There is a temporary decline in the percentage of sales coming from instruments, with customers hesitant to invest in new placements.
- The company is facing a high degree of fragmentation in the industry, leading to longer decision-making processes and increased efforts in sales and program management.
Q & A Highlights
Q: Could you elaborate on the latest market developments, particularly regarding molecular instruments and their demand post-pandemic?
A: Marcus Wolfinger, CEO, explained that the molecular segment, the largest in their business, faced saturation due to increased instrument availability during COVID-19. However, there is a positive shift in market sentiment, especially in the U.S., with growth returning in Q4 2024. While the molecular space still shows saturation, other areas like complex sample prep and immunoassays are seeing renewed customer interest.
Q: How do tariffs and U.S. research budget pressures affect your competitive landscape and business?
A: Marcus Wolfinger noted that short to mid-term, tariffs have minimal impact due to local manufacturing by customers. The value proposition of their products remains competitive despite tariffs. Long-term effects of tariffs and research budget cuts could influence decision-making and industry dynamics, but currently, Stratec's business model remains resilient.
Q: What is your expected tax rate going forward?
A: Oliver Albrecht, Interim CFO, stated that the tax rate is expected to average around 28%, slightly below the German tax burden. This is due to earnings generated in Switzerland, Germany, and Hungary, with Switzerland having a lower tax rate.
Q: What can we expect from your Q1 publication, and will there be a conference call?
A: Marcus Wolfinger confirmed there will be no conference call for Q1. The publication will include top line and bottom line figures with minimal details due to the workload on the accounting department.
Q: How is Stratec handling the elevated inventory levels and what are the expectations for cash flow in 2025?
A: Marcus Wolfinger mentioned they expect a cash release from elevated inventory levels, potentially between EUR10 million to EUR15 million. They anticipate good cash flow development in 2025, driven by improved procurement processes and renegotiated supply agreements.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
