Ependion (EPEN) Q4 2024 earnings summary

Executive summary

• Q4 2024 order intake rose 20% year-over-year to 572.3 MSEK, with growth across all business entities and focus segments, exceeding expectations and marking a sequential sales rebound mainly driven by Westermo.

• Sales were stable year-over-year at 578.2 MSEK, up 17% sequentially, mainly driven by Westermo.

• Profitability improved, with Q4 EBIT at 65.5 MSEK and an EBIT margin of 11.3%, reflecting improved gross margin and cost control; Westermo achieved an all-time high EBIT margin, while Beijer Electronics' EBIT remained low due to an unfavorable product mix.

• Free cash flow was strong at 80 MSEK for the quarter and a record 187 MSEK for the year, driven by reduced working capital and lower inventory levels.

• Full-year 2024 order intake and net sales declined by 12% and 9% respectively, reflecting a weaker industrial economy.

Financial highlights

• Q4 order intake: 572.3 MSEK (+20% YoY); sales: 578.2 MSEK (-2% YoY, +17% sequentially); EBIT: 65.5 MSEK (11.3% margin, up from 10.4%).

• Net income for Q4: 35 MSEK (vs. 34 MSEK YoY); EPS: 1.22 SEK (vs. 1.18 SEK YoY), both slightly improved year-over-year.

• Negative FX impact of -4 MSEK in Q4, mainly from transactional variances.

• Board proposes increased dividend of 1.25 SEK (1.00) per share for 2024.

• Significant reduction in working capital, mainly inventory.

Outlook and guidance

• Cautiously optimistic for 2025, with strong mid- and long-term prospects due to structural growth in focus segments and global demand trends.

• Near-term uncertainty remains due to geopolitical and economic factors.

• Financial targets: 10% average organic growth, EBIT margin of at least 15%, and maintaining dividend payments.