Seco (IOT) Q2 2024 earnings summary

Executive summary

• Net sales for H1 2024 declined to €95.3 million, down about 15% year-over-year, mainly due to customer destocking and weak demand across geographies and sectors.

• Clea software business grew 17% year-over-year to €12.6 million, now contributing over 13% of total revenue and supporting improved profitability and margin expansion.

• Gross profit margin improved by over 300 basis points to 52.7% compared to the same period last year, driven by higher software mix and lower component costs.

• Adjusted EBITDA declined 40% year-over-year to €15.8 million (16.6% of sales), impacted by higher OpEx and unfavorable production mix.

• Management remains focused on long-term profitable growth, innovation, and a strong rebound in 2025, targeting a return to double-digit organic growth and historical profitability levels.

Financial highlights

• Net sales for H1 2024 were €95.3 million, down from €111.9 million in H1 2023, mainly due to high interest rates, reduced demand, and destocking trends.

• Clea software revenue reached €12.6 million, 13% of total sales, up 17% year-over-year.

• Gross margin at 52.7%, up over 300 bps year-over-year, driven by Clea and favorable component costs.

• Adjusted EBITDA margin was 16.6%, down from 23.7% in H1 2023.

• Adjusted net income was €3.9 million (4.1% of sales), down 69% year-over-year.

Outlook and guidance

• Full-year 2024 revenues expected to exceed €180 million, with gross margin above 50%.

• 2025 guidance targets 15%+ organic top-line growth and a return to historical profitability, supported by new customer wins and normalization of demand.

• Second half of 2024 revenues expected to be broadly in line with the first half, with gradual recovery in order intake.

• CapEx plans have been reduced, with extraordinary investments halted.

• OPEX to remain under control, with no short-term adjustments anticipated.