StrongPoint: Q2 first take, weaker profitability - ABG

Q2: EBITDA excl ALS ~NOK 7m vs our NOK 18m Continues ramping up e-com investments Estimates likely to be cut on lower GM and higher opex Q2: EBITDA excl ALS materially below estimates StrongPoint reported Q2 revenues of NOK 321m, (+28% y-o-y), 7% above our estimate NOK 300m. However, we note that Q2 included one month of financials for the ALS acquisition, which we had not included in our estimates. Adjusting for this, revenues was 3% below. The gross margin was 38.8%, down from 40.6% in Q2 last year (continued ops), and below our 40.5% expectation mainly explained by higher share of ESLs under product revenues. EBITDA was NOK 10m (3.1% margin), but also includes NOK 5m in contribution from ALS, i.e the clean figure was closer to NOK 7m, materially below our NOK 18m expectation. This also includes due dilligence costs of NOK 2m related to the ALS acquisition, in line with what we had included in our estimates. EBIT was NOK 1m vs our NOK 11m, and reported EPS was NOK 0.12 vs our NOK 0.18, but includes a positive FX effect.

E-com investments continues to drag on EBITDA near-term StrongPoint continues to be negatively impacted by components shortages, but growth was still strong: +28% y-o-y and +14% organically (excl ALS). The organic figures is driven by continued large-scale rollouts of ESLs and Cash Management solutions. This also affected the gross margins negatively, as ESLs typically have lower GM than other products. On opex, StrongPoint continues to ramp up its R&D and e-com sales/marketing costs, negatively contributing ~NOK 13m y-o-y compared to Q2’21, and says it would have achieved EBITDA margins of ~10-11% if it only focused on its in-store solutions. On outlook, StrongPoint reiterates its 2025 ambitions (NOK 2.5bn revenues, 13-15% EBITDA margins).

Negative estimate changes likely Based on the Q2 report we expect negative estimate changes following the report, driven by both lower gross margins and higher opex. At the same time, earlier consolidation of ALS is po ... Läs mer på ABG Sundal Collier

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/StrongPoint/News/2022/7/strongpoint-second-quarter-and-first-half-2022-financial-results/