Elis (ELIS) H2 2023 earnings summary

Executive summary

• Record 2023 revenue of €4,309.4m (+12.8% reported, +11.8% organic), adjusted EBITDA of €1,474.8m (+17.1%) and free cash flow of €303.6m (+35.0%).

• Adjusted EBITDA margin expanded 130bps to 34.2%; leverage declined to 2.0x from 2.5x at year-end 2022.

• Strong pricing, workwear contract wins, productivity gains and lower logistics and energy consumption supported performance.

Financial highlights

• Revenue was €4,309.4m, up 12.8% reported and 11.8% organically; the average price effect was 9%.

• Adjusted EBITDA rose 17.1% to €1,474.8m, with margin up 130bps to 34.2%; adjusted EBIT increased 25.6% to €683.1m, with margin up 160bps to 15.9%.

• Net income increased to €262.4m from €202.6m; headline net income was €433.4m (+23.4%) and fully diluted headline EPS was €1.70 (+18.4%).

• Free cash flow after lease payments rose 35.0% to €303.6m; net financial debt fell to €3,025.5m from €3,178.0m.

• Pre-tax ROCE reached 13.9%, up from 11.6%.

Outlook and guidance

• 2024 organic revenue growth expected at ~5%, with price increases below 2023 levels as inflation slows.

• Adjusted EBITDA margin expected close to 35%, including €20m of additional salesforce costs; adjusted EBIT margin expected stable at ~16%.

• Free cash flow expected at ~€340m, supported by EBITDA growth and further working-capital normalization; fully diluted headline EPS expected above €1.75.

• Year-end 2024 leverage expected to decline by a further ~0.2x; acquisitions of small and mid-size targets expected to recover alongside deleveraging.