ADDvise Group (ADDV) Q4 2024 earnings summary

Executive summary

• Q4 2024 net sales reached SEK 442 million, up 11% year-on-year, with a smaller organic decline of -3% compared to -25% in the previous quarter; full-year net revenue rose 21.7% to SEK 1,670.7 million, mainly from acquisitions, while organic net revenue fell 14.3%.

• EBITDA for Q4 was SEK 89 million (20% margin), and full-year EBITDA was SEK 379 million (22.7% margin), both impacted by product mix and normalization after exceptional 2023 results.

• Orders received rose 32.4% year-over-year to SEK 1,866.1 million, but organic orders received decreased by 8.6%.

• Acquisitions from late 2023 and early 2024 are performing at or above expectations, and business momentum remains strong in healthcare and lab segments.

• The Board proposes no dividend for 2024 and has resolved on a SEK 457 million rights issue to strengthen the balance sheet and reduce debt.

Financial highlights

• Q4 net revenue was SEK 441.6 million, up 11.2% year-over-year; organic net revenue declined by 3.4%.

• Q4 EBITDA was SEK 89.4 million (20.2% margin), down from SEK 126.1 million, mainly due to normalized earnout revaluations.

• Cash flow from operations for the year was SEK 182.5 million, affected by CapEx investments in South America; cash conversion dropped to 48.1%.

• Net debt increased to SEK 1,434.6 million, with net leverage at year-end at 3.8x EBITDA, above the long-term target of 3x.

• Equity ratio improved to 24.2% (18.7%).

Outlook and guidance

• Expectation for organic sales pickup in healthcare in Q1 2025 as pharma comparables fade; management optimistic about normalized levels in pharmaceuticals and clinical trials.

• Focus on EBITA growth, targeting a 20% margin over time, and aiming to double EBITA every five years; new long-term targets include average annual EBITA growth of 15%, ROCE of 15%, and net debt/EBITDA not exceeding 3.0.

• Rights issue and associated warrants aim to reduce debt and support continued acquisition-driven growth.

• Return on capital employed targeted to increase from 12% in 2024 toward 15% in the long term.

• Up to 25% of previous year's profit may be paid as dividend in the future.