StrongPoint: A soft quarter as expected - ABG

Q3: EBITDA NOK 4m - soft but broadly in line with our NOK 5m
Customer postponing investment hitting profitability
2025 ambition kept. Company sees larger project wins in Q4


Q3: lower sales, but reduced costs strengthened the quarter
>StrongPoint's Q3 was soft, with sales down 15% y-o-y (no M&A help this quarter). The market is still challenging as customers are still postponing and delaying orders, in particular in the Nordics. Total revenues came in at NOK 293m (-6% vs ABGSCe). Revenues from Noway were up 8% while revenues from Sweden were down 40% y-o-y, respectively. StrongPoint has seen higher personnel expenses, especially in Sweden and the Baltics where most of its employees are located. This led to opex up 25% y-o-y., i.e. clean Q3 EBITDA was NOK 4m (ABGSCe NOK 5m), down from NOK 21m in Q3'22. Although sales were down, COGS came in lower than our estimates, giving a gross margin of 44% vs our estimate of 39% (better product mix in Sweden, i.e less ESL deliveries). Cash flow from operations was weak at NOK -24.5m vs NOK 4m in Q3'23. The reduced cash flow is mainly due to weak profitability and high working capital. On a positive note, the gross margin was better than expected and sales from Baltics were up 16% y-o-y, which shows that Baltics can be a key market for the company in the future. We keep our '23e and '24e EBIT estimates unchanged.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/StrongPoint/Equity-research/2023/10/strongpoint---a-soft-quarter-as-expected/