TXT e-solutions SpA (FRA:TXE) Q3 2024 Earnings Call Highlights: Robust Revenue Growth Amid ...

GuruFocus News
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In This Article:

  • Revenue: 220 million, a 27.8% increase compared to the same period last year.

  • Organic Growth: 26.5% increase, with non-core activities contributing approximately 10 million.

  • EBITDA: 28 million, a 31% increase from the previous year.

  • EBITDA Margin: 12.8%, slightly lower than the previous year's margin.

  • Net Profit: 12 million, with a net profit margin of 5.5%.

  • Gross Margin: Decreased from 25.6% to 22.6% year-over-year.

  • Investment in R&D: 10.5 million, a 56% increase compared to the previous year.

  • Net Financial Position: Adjusted net debt of 60 million.

  • Smart Solution Division Growth: 50% increase in revenue, reaching 43.9 million.

  • International Revenue: 26% of total revenue, amounting to 56.7 million.

  • Acquisitions: Web Genesis acquired for 63 million, contributing to strategic growth.

Release Date: November 15, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • TXT e-solutions SpA (FRA:TXE) reported a strong revenue growth of 37.8% for the first nine months of 2024, reaching 220 million euros, which matches the entire revenue of the previous year.

  • The company achieved a significant organic growth of 26.5%, driven by synergies and aggressive market positioning.

  • The Smart Solutions division experienced a remarkable 50% growth, contributing positively to the overall margin.

  • TXT e-solutions SpA continues to invest strategically in R&D and commercial activities, with a 56% increase in R&D investments compared to the previous year.

  • The acquisition of Web Genesis is expected to enhance the company's presence in the public sector and strengthen its software engineering capabilities, with a robust order backlog of over 200 million euros.

Negative Points

  • The EBITDA margin faced pressure, decreasing to 12.8% due to significant investments in growth and non-core activities with lower margins.

  • The gross margin declined from 25.6% to 22.6% year-over-year, impacted by a higher incidence of service revenues and non-core activities.

  • The net financial position showed an increase in debt, with an adjusted net financial debt of 60 million euros as of September 2024.

  • There was a temporary delay in the collection of trade receivables, affecting cash flow and working capital.

  • The company's net profit margin decreased slightly to 5.5% from 6.1% in the same period of the previous year.

Q & A Highlights

Q: What would be the TXT margin excluding the one-off sales for 10 million? And what can we expect on the margin assuming the growth in 2025 normalizes at 10%? A: Considering the non-core activities of about 10 million, the EBITDA margin would be slightly better than 13%, approximately 13.2%. For 2025, assuming growth normalizes at 10%, we expect to return to our guidance of around 14% or better, driven by higher-margin divisions like smart solutions and contributions from acquisitions like Web Genesis.

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