Seco (IOT) Q4 2024 earnings summary

Executive summary

• Full-year net sales declined 12.5% to €183.5 million, outperforming most sector peers amid customer destocking and a complex market environment.

• Clea business contributed €21.3 million, representing 12% of sales and remained stable year-over-year, with recurring revenue supporting resilience.

• Adjusted gross margin remained strong at 52.7%, stable year-over-year and improving quarter-over-quarter.

• Adjusted EBITDA was €28.2 million (15.4% of sales), down 44.2% year-over-year, but profitability rebounded in Q4.

• Strategic focus on high-value products, operational efficiency, and strong customer relationships led to improved working capital and reduced net debt.

Financial highlights

• Net sales declined from €209.8 million in 2023 to €183.5 million in 2024, mainly due to customer destocking.

• Adjusted gross margin was €96.8 million (52.7% of sales), nearly matching the previous year's record level.

• Adjusted EBITDA dropped to €28.2 million (15.4% of sales), down from €50.6 million (24.1%) in FY23.

• Adjusted net income was €1.4 million (0.7% of sales), a 94% decrease year-over-year.

• Net financial debt improved to €41.3 million from €52.0 million, driven by €15.6 million cash generation in Q4.

Outlook and guidance

• Revenue recovery expected to begin in Q1 2025, with anticipated revenues exceeding €47 million and gross margin above 50%.

• Growth in 2025 to be driven by new product pipeline, increased project leads, and favorable macroeconomic conditions.

• CapEx to remain at €20-22 million per year for the next three years.

• Positive book-to-bill ratio and incoming backlog trends signal end of OEM inventory adjustment.

• Market outlook remains positive due to ongoing digital transformation and demand for AI at the edge.