SAF-Holland (SFQ) Q3 2024 TU earnings summary

Executive summary

• Q3 2024 sales declined 20.4% year-over-year, mainly due to weaker OE demand, but profitability was supported by resilient aftermarket business, strict cost control, and contributions from recent acquisitions including Assali Stefen.

• Adjusted EBIT margin held at 9.8% in Q3, reflecting cost discipline and a favorable business mix.

• Opened a new tech center in India to strengthen global R&D and regulatory compliance.

• Issued a €100 million promissory note, using proceeds to repay €68 million in term loans, improving maturity profile and investor base.

• Operating free cash flow was €42.4 million in Q3, with leverage at 1.9x, below the 2024 target.

Financial highlights

• Q3 2024 group sales were €439.9 million, down 20.4% year-over-year; organic sales declined 21.5%.

• Adjusted EBIT for Q3 was €43.3 million (margin 9.8%); adjusted EPS was €0.42.

• For the first nine months, group sales reached €1,452.5 million with a 10.1% adjusted EBIT margin and €1.80 adjusted EPS.

• Operating free cash flow was €42.4 million in Q3 and €86.7 million for the nine months.

• Net working capital ratio increased to 16.4%, mainly due to acquisitions and higher aftermarket inventory needs.

Outlook and guidance

• Full-year 2024 sales forecast specified at around €1.95 billion, with an adjusted EBIT margin of about 10%.

• CapEx guidance remains up to 3% of sales.

• Market environment expected to remain challenging in 2024, with recovery anticipated in 2025.