Vestum (VESTUM) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales were SEK 1,373 million, down 10–10.5% year-over-year, with organic growth at -9% to -9.1% and adjusted EBITA margin at 9.7% (down from 11.6%).

• Net debt, including earn-outs, was reduced by 20% year-over-year to SEK 2.0 billion, with leverage at 2.7x, above the 2.5x target.

• The Water segment showed strong, stable demand and improved profitability, with an EBITA margin of 23.7% and strong growth in the UK.

• The first acquisition in two years, PDAS Holdings Ltd, was completed post-quarter, strengthening the Water segment and UK presence.

• Strategic review completed, with divestments of Plåtslagaren G.H Johansson AB, WesC business, and Arctic Infra AB.

Financial highlights

• Organic growth was -9% to -9.1% year-over-year; net sales decreased 10–10.5%.

• Adjusted EBITA margin declined to 9.7% from 11.6% in Q2 2023.

• Operating cash flow for Q2 was SEK 118 million; LTM cash conversion reached 107%.

• Free cash flow for the last 12 months was SEK 441 million; Q2 free cash flow was SEK -29 million, impacted by one-off refinancing costs.

• Leverage increased to 2.7x, up from 2.5x sequentially, and to 2.8x including earn-out debt.

Outlook and guidance

• Water segment expected to maintain solid demand and profitability in H2 2024, especially in the UK.

• Services segment anticipates a rebound in product companies in H2, with installation companies expected to recover later.

• Infrastructure segment performance in Q2 likely to spill over into H2, with some improvement as new projects ramp up.

• Leverage is expected to remain above the 2.5x target for the rest of 2024.