Norva24 Group (NORVA) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue grew 18% year-over-year to NOK 934.8 million, with 5.4% organic growth and adjusted EBITA up 7.1% to NOK 132.8 million; strong cash flow from operations at NOK 242.4 million.

• Six acquisitions in 2024, including Rör & Ledningsinspektion in Stockholm AB, added close to NOK 400 million in annual revenues; Vitek Miljø AS acquisition is pending regulatory approval.

• The company is the market leader in Northern Europe’s underground infrastructure maintenance sector, operating in a large, acyclical, and resilient market with significant growth potential.

• Maintained strong cash conversion, with LTM cash conversion at 89.6% and net cash inflow from operating activities up 84% in Q3.

• Result before tax for Q3 was NOK 72.9 million, with EPS at 0.27 NOK, both lower than the previous year due to one-off items and margin pressure.

Financial highlights

• Adjusted EBITA margin for Q3 was 14.2%, down 1.4 percentage points year-over-year; YTD margin is 11.5%.

• Net financial costs were NOK 5.1 million in Q3, with a recognized earn-out gain of NOK 17.7 million due to reversal for an underperforming German branch.

• Net debt at quarter-end was NOK 1,597.1 million, with a net interest-bearing debt/adjusted EBITDA ratio of 2.2x.

• Cash and cash equivalents at quarter-end were NOK 318.4 million.

• Goodwill increased to NOK 2.08 billion due to acquisitions; no impairment risk identified.

Outlook and guidance

• On track to reach NOK 4.5 billion revenue target for 2025 through organic growth and acquisitions, with midterm adjusted EBITA margin target of 14%-15%.

• Management expects to outperform last year's Q4 margin and sees continued strong cash conversion.

• If the Vitek acquisition is not approved, the revenue target becomes more challenging but not out of reach due to a robust acquisition pipeline.

• No annual dividends expected in the medium term as cash flows are reinvested into growth and acquisitions.

• Germany expected to recover in 2025 as underperforming unit issues are addressed and new business platform is implemented.