Q3 2024 HMS Networks AB Earnings Call Transcript
Key Points
- HMS Networks AB (HMNKF) reported an adjusted EBIT margin of 24.5%, which is close to their target of 25%, despite challenging market conditions.
- The company has successfully reduced its organic operating expenses by 22%, demonstrating effective cost management.
- HMS Networks AB (HMNKF) has improved its cash flow, achieving a cash conversion rate of almost 100%, which is considered strong.
- The acquisition of PEAK-System is expected to enhance the company's offerings in the automotive and medical sectors, contributing to long-term growth.
- The new organizational structure is designed to improve customer focus and accountability, potentially leading to better integration and efficiency.
- Net sales decreased by 30% organically, reflecting a weak market environment, particularly in North America and Germany.
- Order intake also saw a decline of 8% organically, indicating continued market challenges and inventory adjustments.
- The company is experiencing significant destocking effects, with an estimated impact of SEK100 million, similar to the previous quarter.
- The Red Lion business reported a 26% decline in sales compared to the previous year, highlighting challenges in project business and inventory levels.
- HMS Networks AB (HMNKF) faces high net debt levels, which could be a concern, especially with the recent acquisition of PEAK-System.
Welcome to the HMS Networks Q3 presentation for 2024. (Operator instructions)
Now I will hand the conference over to CEO, Staffan Dahlstroml; and CFO, Joakim Nideborn. Please go ahead.
Thank you, good morning, everybody. Greetings from a sunny Stockholm and me and Joakim would like to take you through the quarter 3 report. Not too much sunshine on that, unfortunately. But let's take a look on the agenda for the day.
So I will start with a short business update and talk a little bit about our new organization that we presented earlier this week and then I'll switch to Joakim, and he will talk about some financial results, and we end up with a Q&A.
But let's first look on the quarter we're closing. We start from the top, we see net sales minus 30% organic. The reason why we see plus, minus series, of course, we added the big Red Lion part compared to last year. But of course, we are very disappointed to see this weak market situation. We were expecting this
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