Tomra Systems (TOM) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was €333 million, flat year-over-year, with strong Collection growth offset by declines in Recycling and Food.

• Gross margin improved to 44%, up from 42% last year, with all divisions contributing.

• Adjusted EBITA was €44 million (13% margin), down from €46 million (14%) in Q2 2023, mainly due to lower volumes in Recycling and Food and a €0.5 million one-off restructuring cost in Food.

• Cash flow from operations rose sharply to €34 million from €3 million in Q2 2023.

• Adjusted EPS was €0.08, down from €0.09 in Q2 2023.

Financial highlights

• Collection revenue grew 15% year-over-year to €193 million, driven by strong sales in Romania and Austria.

• Recycling revenue declined 15% to €57 million, reflecting softer market sentiment, especially in plastics and metals.

• Food revenue fell 16% to €82 million, with continued soft market sentiment in fresh food categories.

• Group gross margin reached 44%, with Collection at 40%, Recycling at 53%, and Food at 45%.

• Order backlog hit record highs, up 23% year-over-year in Food and 9% in Recycling, providing strong visibility for future quarters.

Outlook and guidance

• Collection expected to deliver mid- to high-single-digit growth for the full year, with momentum in Austria and limited impact from Poland in 2024.

• Recycling guidance adjusted to flat year-over-year growth, with a strong Q4 anticipated due to large project deliveries.

• Food division focus remains on profitability, not growth, with no growth expected in 2024; cost reduction program on track for €30 million savings by end-2024.

• Margins in Collection expected to stay above 40%; Recycling and Food margins to remain strong but not at Q2's elevated levels.

• Estimated 45% of Recycling and 65% of Food order backlog to convert to revenue in Q3 2024.