Seco (IOT) Q3 2024 earnings summary

Executive summary

• Net sales for the first nine months of 2024 were €139.4 million, down 14% year-over-year, mainly due to customer destocking and lower sales volumes across geographies and sectors.

• Clea software business grew 4% year-over-year to €17.0 million, now representing 12% of net sales, with a 214 basis point increase versus the prior year.

• Gross profit margin improved to 52.1% (+261 basis points year-over-year), supported by a better product mix and easing component costs.

• Adjusted EBITDA was €20.4 million (14.7% of sales), down 45% year-over-year, reflecting lower sales and gross margin.

• Adjusted net income dropped 90% year-over-year to €1.6 million (1.1% of revenue); reported net income was -€7.6 million due to non-recurring items.

Financial highlights

• Net sales declined to €139.4 million from €162.1 million in 9M23, mainly due to customer destocking.

• Clea software revenue increased by 4% year-over-year to €17.0 million, now 12% of total revenue.

• Gross margin rose to 52.1% (up 261 basis points), but gross profit fell due to lower volumes.

• Adjusted EBITDA margin was 14.7% (down from 23.0% in 9M23), totaling €20.4 million.

• Adjusted net financial debt increased to €56.9 million as of September 30, 2024, mainly due to extraordinary payments.

Outlook and guidance

• Full-year 2024 guidance confirmed: revenues expected to exceed €180 million and gross margin above 50%.

• Revenue growth expected to return to positive in H1 2025 as business fundamentals stabilize.

• Organic growth of 15% anticipated in 2025 under normalized market conditions.

• Cost reductions in OPEX are expected to benefit profitability in Q4 and throughout 2025.

• Visibility for 2025 is improving, with order intake and book-to-bill ratios turning positive.