Vestum (VESTUM) Q3 2024 earnings summary

Executive summary

• Profitability improved in Q3 2024, with an adjusted EBITA/EBITDA margin of 11.5%, despite challenging market conditions.

• Product companies now contribute 50% of group EBITA/EBITDA, with strong performance in the Water segment, especially in the U.K.

• Operational cash flow was SEK 200 million in Q3, and leverage stood at 2.8x EBITDA at quarter end.

• Balanced capital allocation between acquisitions and deleveraging, with a continued M&A focus on product companies.

• The acquisition of PDAS Holdings Ltd in August strengthened the Water segment and contributed to increased leverage.

Financial highlights

• Q3 2024 net sales were SEK 1,275 million, down 8% year-over-year, with organic growth at -10.7%.

• Adjusted EBITA/EBITDA margin increased to 11.5% from 11.4% year-over-year.

• Free cash flow for the last 12 months was SEK 379 million, representing 69% of EBITDA/adjusted EBITA.

• Net debt stood at SEK 2.1 billion, with leverage at 2.8x EBITDA.

• Cash conversion remained strong, ranging from 93% to 100% on a rolling 12-month basis.

Outlook and guidance

• Positive market outlook continues, with expectations to return to volume growth in 2025.

• Organic growth activities have been initiated and are expected to yield results next year.

• Water segment expected to maintain strong performance, while Services and Infrastructure segments anticipate volume growth later in 2025.

• Further add-on acquisitions anticipated, especially in the Water segment.

• Focus remains on solid profitability, stable cash flows, and expanding product companies.