Bechtle (BC8) Q3 2024 earnings summary

Executive summary

• Q3 2024 saw continued weak demand, especially from SME clients in Germany and France, and underperformance in the public sector segment, with business volume modestly up 1.1% for the nine months but revenue slightly down 0.8% year-over-year.

• Revenue grew 2.2% year-over-year in Q3 2024 to €1,511.3 million, mainly due to IFRS 15 effects, but EBIT fell 16.2% to €80.7 million and net income declined 16.2% to €55.9 million, reflecting margin pressure and the absence of a large prior-year software project.

• Cost pressures increased due to higher personnel and operating expenses, notably from vehicle and electricity costs linked to sustainability initiatives.

• Order backlog increased to €2,124 million, but incoming orders declined 7.0% in Q3.

• Workforce grew by 5.2% year-over-year to 15,608 as of September 30, 2024, with 69.1% of new hires from acquisitions.

Financial highlights

• Business volume for the nine months increased 1.1% to €5,672m, while revenue for the nine months decreased 0.8% to €4,489m.

• EBIT for the nine months fell 8.7% to €249.6m, with Q3 margin at 5.3%; EBITDA for Q3 was €115.8 million, down from €117.8 million a year earlier.

• Earnings per share for Q3 2024 were €0.44, down from €0.53 in Q3 2023.

• Cash flow from operating activities for the first nine months reached €289.4 million, up 52.1% year-over-year.

• Free cash flow for the nine-month period was €196.0 million, up from €28.9 million a year earlier.

Outlook and guidance

• The company withdrew its 2024 annual forecast after two profit warnings and Q3 underperformance, citing persistent economic uncertainty and weak public sector demand.

• No new forecast issued for the remainder of 2024; some improvement expected in Q4 but extent remains uncertain.

• Anticipates stronger future demand from public sector and international business, driven by digital transformation, AI, Windows 10 replacement, and cybersecurity regulations.

• Continued focus on European M&A strategy and expectation of public sector business stabilization in Q4.