Proact: Margin resiliency and strong cash flow - ABG

An in line report on adj. EBITA and -8% org growth (ABGSCe -7%)
Cost reductions bear fruit, adj. EBITA +2% in 2023e-'25e
Estimates hold up well at 6.9x 2023e EV/adj. EBITA and 5.6x in '24e


Cost reductions bear fruit in Q3

As expected, Proact delivered a negative organic growth due to a strong comparable quarter of large system deliveries in Q3'22. The reported -8% was just short of our estimate of -7% driven by the -20% decline in system sales. The market is seeing somewhat longer sales cycles, especially outside the Nordics, which together with continued tough comps should result in another negative organic growth in Q4e (we estimate -17% as comps get even tougher). However, Proact initiated a cost reduction program earlier in 2023 that is already showing good results, keeping the adj. EBITA margin up. We estimate more effects in Q4e, and therefore the adj. EBITA to decline -13% y-o-y. Combined with a strong cash flow (OCF YTD up 194% y-o-y), Proact continues to generate cash flow adding to its net cash position.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/proact/Equity-research/2023/10/proact---margin-resiliency-and-strong-cash-flow/