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Good afternoon, and welcome to Sitowise's Half Year 2022 presentation. My name is Minttu Vilander, and I'm the Head of Sustainability and Communications here at Sitowise. Today, here on the stage with me are our CEO, Heikki Haasmaa; and our CFO, Heidi Karlsson, who will shortly start the presentation.
Before that, I will briefly give you some technical instructions. Here, you can see our agenda today. And if you wish to comment, you can do it via the chat box under the presentation. I will go through the questions you've sent after the presentation. Then if you wish to ask the questions yourself, you can always dial to our conference call. You can find the instructions, the phone numbers and the pin code from the stock notice.
Now we will continue with the presentation, and I will hand over to Heikki and Heidi. Heikki, you are welcome to start.
Thank you, Minttu, and a warm welcome on my behalf as well. Let's look at our second quarter in a nutshell. Firstly, I was pleased to see our double-digit top line growth to continue. Also, our organic growth was 4%. On the other hand, our profitability declined. This was mainly driven by a higher level of internal activities. And we'll get back to these detailed reasons in a moment. That said, however, we see that the profitability is expected to improve in second half of the year.
The order book remained on a high level. There are still uncertainties in the market, but the technical consultancy market has proven to be resilient. We carried out 3 acquisitions during the second quarter. Combined, the 3 acquired companies generated approximately EUR 12 million in net sales in 2021 and brought 135 new employees to Sitowise. Lastly, I would like to mention our recent personnel survey, which was conducted in May. It showed that willingness to recommend Sitowise as an employer has raised even further. Personally, the highlight for me was that based on our employees' feedback, we really have the best team leaders in the industry. So that's really great. Now I hand over to Heidi, who will walk us through in more detail to the numbers.
Thank you, Heikki. All in all, we had a satisfactory second quarter. End of June, our order book was EUR 169 million. This is 4% higher than beginning of the year and roughly on the same level as in March. Compared to the second quarter last year, the order book increased by more than 20%. And the growth in the order book, it was mainly organic and it was driven by different size of projects.
We are pleased that we continue to have a solid and good order book in all of our business areas. The double-digit growth in our top line, which started already in third quarter last year has continued. In the second quarter, our net sales was EUR 52 million or 11% higher than in the corresponding period last year. The 11% growth in net sales was driven both by acquisitions but also by the organic 4% growth. And this was already a third quarter in a row that our organic growth was positive and above the market growth. Our growth in the second quarter could have been even higher, but was unfortunately weakened by an increase in sick leaves and by the lower utilization rate.
Nevertheless, the EUR 52 million is our new quarterly record, and it also means that we have now reported for the first half more over EUR 100 million worth of revenue. In the second quarter, the adjusted EBITA was EUR 4.9 million. It's EUR 1 million less than in Q2 last year. So I will now hand over back to Heikki to tell more, to go through the reasons for this lower profitability as well as some of the actions that we have already taken.
Yes. As said, we had lower profitability this quarter, and it's important to understand why that was the case. Firstly, there was a clear deliberate component in the decline. We made exceptional investments in personnel events and trainings. This was done after a long period of not being able to see people face-to-face. And we strongly feel these investments were important and necessary to inspire and also engage our people after a long period of remote work.
Secondly, we had more face-to-face customer visits and that impacted utilization rate. It is naturally great that we have now the possibility to meet our customers face-to-face. And we see that this is important going forward and will be naturally supporting us and the business. The third driver were COVID-19-related sick leaves, absences, which remained in a high level, especially in the beginning of the quarter, but leveled off later on. So these points explain the lower profitability for the second quarter.
Now looking at the rest of the year and in line with our guidance, we expect to catch up with profitability during the second half of the year. Our aim is to increase profitability by firstly, continuing to focus on pricing and cost containment; secondly, concentrating on billable project work; and thirdly, see that there is opportunity to improve our way of working in this hybrid work environment and especially look at the costs coming from the premises. And as a fourth item, we see that new acquisitions will actually help us also with the profitability.
I also would like to emphasize that we clearly keep in our minds our long-term adjusted EBITA target of being over 12%, and that guides our decisions going further. Now back to Heidi for more figures.
Before we dig into the development of our business areas, I would like to highlight 1 figure in this table. Our leverage, which we measure by net debt divided by adjusted EBITDA, increased and was 2.7x at the end of the second quarter. This change was due to the 3 acquisitions, which we completed in June as they were mainly financed by new bank loans. However, the group's liquidity remained good in the second quarter.
Next, we will take a closer look at the development of our business areas. In the second quarter, like in the first quarter, we had strong top line growth in all our business areas. Our biggest business areas, Buildings and Infrastructure grew clearly faster than the market. In our strategically important currently still smaller business areas, Digital Solutions and Sweden, the growth continued high. We are also content that there was organic growth in all the business areas, and it was particularly strong in Infra, Digi and Swed. You might recall from the first quarter webinar that the organic growth is composed of 3 factors: higher number of personnel, better utilization and higher average prices. The impact of these factors was different depending on the business area. It's also important to note that Digital Solutions and Sweden's share of the group's net sales keeps on increasing, which is in line with our strategy and is currently over 30%. And next, Heikki will talk more about the highlights of each business area.
Yes. Thanks. So the order book remained at a high level in all our business areas. In the Buildings business area, our net sales increased by 8%, driven by the increase in the number of employees and strengthening of the growth of the acquired companies due to their successful integration. One of the highlights was the growth of the renovation services and the increasing importance of low carbon solutions.
One example of this is a structural design for a project included in the Kottarainen quarter in Helsinki City Center, in which an educational building will be converted into rental housing.
The Infrastructure business also was performing really strongly, and the net sales increased by 6%, faster than market growth was supported by the higher average fees and an increase in the number of employees as well.
Infrastructure received also several significant assignments. For example, the design of the first phase of the Tampere one-hour train, which shows our strength in rail projects.
The net sales of the Digital Solutions business area increased by 49%. So the growth was boosted by the acquisition of the Infra control company in Sweden a year ago. But also the organic growth in net sales was strong and clearly faster than the overall development in the IT market.
And the net sales of business in Sweden also increased clearly by 11%. And the market is there rather stable which is also giving us good opportunities going forward. During the second quarter, we finalized 3 M&A cases and all of them support really well our profitable growth. We acquired Rakennuttajakaari which is a company specialized in renovation services with a net sales of around EUR 5 million last year. As a result of this acquisition, Sitowise has formed now an expert organization with more than 250 renovation specialists, which is the largest in its field in Finland. And this is really meaningful because renovation expertise will become even more central in the future due to rapid changes in legislation to address climate change and sustainable development.
In Sweden, we further expanded our service offering with electrical design. E60 Elkonsult is not a big company as such, but it brings valuable expertise to our offering, especially in Sweden. We also strengthened our digital business area significantly by acquiring a company called Bitcomp, which is a pioneer in SaaS, Software-as-a-Service solutions for the forest and natural resources sector. Bitcomp employs nearly 80 people in Finland and last year, the company had net sales of roughly EUR 5.6 million. This acquisition is important to us because the transaction more than doubled our SaaS business volume. And we will keep eyes open for the similar opportunities in the future as well.
Talking a little bit more about the M&A. So we've had an excellent track record in the M&As. And during the last 10 years, we have done actually more than 60 successful acquisitions that have been integrated well to our company. The most important reason for the [indiscernible] is our M&A strategy, where we have clear criteria for the companies that we wish to join our group.
So in every acquisition case, we make sure that the companies have strong financial performance and then the offering and capabilities need to complement us. We also look for new services and customer segments and then wider geographical reach. One important thing also is that we always look for companies that have really committed management and employees because the cultural fit to our organization is really important.
And when it comes to the integrations, we see that there are 2 like the main reasons why we have been successful and believe that we will be successful. So firstly, it's about people, people leadership. As I said, we have the industry-leading team leads; and secondly, our Voima platform plays an important role. It helps us to integrate companies in an efficient way to fit to our ways of working.
So what is Voima? It's power in English, and that tells all about it already. So it is our digital platform for project management and also cooperation. And to simplify, you could say that this is our in-house operating system for expertise. So Voima enables easy sharing of information, best practices and also resources throughout the organization, but also really throughout the whole life cycle. And the background for Voima is also interesting because it wasn't just created accidentally. It was created when Sito and Wise joined forces 5 years ago. And we started to develop it for our own needs. So to ensure a successful and efficient integration of these 2 separate companies, we need to digitalize our ways of work. And today, we can see 6 key benefits with Voima. So Voima increases our billable hours, ensures consistent, high-quality work, reduces risks associated with the projects, it ensures customer centricity the customer satisfaction, enhances post-merger acquisitions, as I mentioned, and then finally, Voima is really instrumental in securing the sustainability is ensured in all of our projects. So with Voima, we can make sure that our people use less time and let's use their time in the projects, not like admin work. And personally, I think that Voima is just great, and it brings us -- brings competitive advantage to us.
To show how efficient Voima has been as a tool when sharing best practices and new ways of working. I want to give you an example, which shows how the platform makes a difference in the organization.
So what we can see from here is that a year -- roughly a year ago, we launched our sustainability tool, which is integrated in the Voima system. The person has started to use it really efficiently. And increasingly, we've been able to get to a different level in the usage. And our aim is, of course, that we are able to use the sustainability tool in all of our projects. And it will definitely serve our customers in the best possible way and also challenge firstly, us and then our customers to think about sustainable ways of working. And then as you can see also from the studies here, what we did for our personnel, what has been like big, big change here compared to the past is that our people now start to think much more about sustainability in their work. And of course, this is a big thing. We then believe that this will also change the way how we work and operate.
With that said, let's take a moment to discuss our employees further. So as I said earlier, I'm really proud that we have the industry-leading team leads, and I want to share some findings from our recent employee survey. So first of all, actually, 85% of our people answered to the survey. So this already shows that our people want to be involved in developing our company culture. A very high answer rate also shows that our people want to contribute to the success of our company. And this is, of course, really, really good.
Also as you can see, I'm pleased that we've been able to continuously improve the employee recommendation score. This shows how our continued focus on our staff brings results. There are 2 things where we clearly beat the benchmark. Our leaders are fair and just. This shows that investment on good leadership also improves well being at work. The second area where we stand out is how our teams understand their customers. From the survey, we can also see that the team works -- teamwork works really well. So team spirit is high and information and expertise is shared well. And overall, I would say that we have really committed employees, which is, of course, natural for our -- or crucial for our future success.
Then about the market. So there are no big changes or there are no changes to what we have said earlier. The demand across all of our business areas remained in a good level during the second quarter. And when we look forward, we see that there will be a good demand. And of course, the 4 big mega trends will be supporting us here as well. So urbanization, renovation backlog, sustainability and then digitalization. That said, it's also clear that, of course, uncertainties in the market also impact on our clients' decision-making and will have then -- or might have impact on our performance as well. What comes to the guidance, the guidance remains unchanged. So our estimate is that our net sales and adjusted EBITDA will be better than what it was in '21.
So this concludes our half year presentation. When it comes to the next weeks and months, I'm going to extensively meet several of our investors, customers and also our own people to understand further where we have our strength and further opportunities. And this is, of course, important as we have now decided always to start to create a new winning strategy for the next 3 years. Our plan is that the work continues this autumn. And then after the year-end, we are able to launch it.
I personally think that there's a really solid foundation in the company, and we want to build on our strong company culture. And thinking about the way forward areas where we can find areas for growth are clearly business growth in Nordics. Then digitalization, how do we improve the ways how we work and then creating new businesses. And thirdly, sustainability, which is a huge driver for growth and that we also find our place there and capture the opportunities there. But with that, I think it's -- we are ready for questions.
[Operator Instructions] And our first question comes from the line of Johan Dahl of Danske Bank.
Just a couple of questions. Firstly, on the impact on the profitability from this training exercises and sick leaves, et cetera. If you have spent into those buckets in numbers roughly, just to understand how much this impacted your earnings in the quarter? Would that be possible?
Yes. Thanks, Johan. So for the second quarter, the impact of sick leaves was EUR 400,000. And then the impact of training and these events what we have been organizing was a bit higher than that. So this will explain basically a gap. And as I said, it's the -- those are the main reasons for the lower profitability for the quarter.
Okay. So if we include both the -- I assume you took some external costs for this training exercises. You had a lower billing ratio so if you add those 2, both up, it's about yes, slightly more than EUR 0.4 million. Is that how I should read it?
They are more than that. So only leaves were EUR 0.4 million. And then, of course, when we yes, the different trainings, events have like the direct cost, but then they also have an impact on the utilization rate. So all of those are more.
All right. Just listening to your guidance. You talked about the various drivers to help you achieve that guidance. It just sounds as if some of those drivers, such as premises, for example, or much more long term. I'm just curious to know your visibility in terms of billing ratio and cost containment, which you mentioned. Can you elaborate on that, please?
Yes. And of course, there was a pricing as well. So with all of this, we are looking at all opportunities. So pricing, we've already taken actions and the impact also comes to the second half. And of course, we are looking at additional opportunities there. Then utilization rate, as I mentioned, during the second quarter, we have these exceptional items impacting somewhat negatively the utilization rate and now there will be clearly less of them and that will be improving the situation. And of course, some of the cost items -- cost containment items are more longer-term elements, but we also look carefully at opportunities for short-term impact.
How have you thought about sick leaves and COVID in your guidance? Is that sort of an unchanged then the second half last year compared to what could happen this year or do you envisage an improvement, no elevated sick leaves in H2 in that guidance?
Our estimate is that the sick leaves will be closer to the normal levels. Of course, there's a bit of risk. We all know it. The [ H2 ] might be also a different one, but our estimate is based on like closer to normal levels.
Okay. Final question for me. Just on these acquisitions that will help also earnings in the second half. Is it possible to give a number for the earnings pro forma in these acquired units in the last 6 months to help us understand that can contribute in the second half?
Yes. Yes. And maybe, Heidi, you can elaborate on those ones?
So in 2021, the revenue in these acquired companies was EUR 14 million. And if you think about now the biggest entities that we did purchased, we purchased them now in June and in July, so -- or we purchased them in June. But for example, Bitcomp we purchased so late in June that we will start consolidating it only from July onwards. So I would say that as a kind of a rule of thumb, you could say that -- you can use the 2021 financial statements and take around 50% of that one, and then you can add some growth on top of it.
And what's the ballpark margin there? Just -- it's important for us also to understand your capital allocation as we see what you pay for these units, but we need to get some understanding for what sort of the profitabilities there?
We do not disclose the margins, of course, and per our business area -- not per the acquisitions, but we do -- like Heikki stated in the presentation is that our criteria is that we buy well-performing companies.
[Operator Instructions] And there are no further telephone questions at this time. Please go ahead, speakers.
Okay. Thank you. We have some questions here in the chat. So let's take them next. Firstly, we have questions from Olli Koponen from Inderes. Firstly, Olli would like to know the growth has slowed down in Sweden. Is there any reason for this? And how is the market demand out there?
Yes. We see that the market is rather stable still there, and there is definitely demand for that one. And our growth of 11% was in accordance to our estimates as well. Heidi, do you want to complement that one?
Yes, maybe. So it's like also stated is that, of course, the growth is -- and especially the organic growth is a component of average prices and higher personnel numbers and then utilization rate. And you're maybe looking at Sweden Q2, we had -- as we can see also on the group level that we had a clearly lower utilization rate in the second quarter as compared to last year.
Then there is another question from Olli. How are you able to grow your profits during H2? Does it require some help from external sources for example, inflation going down or market demand growing?
Yes. We are confident with our guidance and estimate here. So we believe that the items what we shared already. So pricing, cost containment, utilization rate and then these new acquisitions will be helping us with the second half of the year.
Thank you. Then we have questions from Robin Nyberg from Carnegie. Firstly, you mentioned that market uncertainty has increased. Have you recently seen changes in the tendering activity?
Yes. We saw that in the beginning of the second quarter, the tendering activity came downwards. But after that one, it has been leveling off and it has been pretty stable after that one. .
Then another one from Robin. You expect to grow profits in the second half. Uncertainty in the market has increased what makes you confident in the improvement?
I would say that we have. As said, we have clear focus areas, clear actions in place. Our teams are very committed. We are able to execute. .
And then lastly, there were also from other people, same kind of question. So Robin asked that Sitowise acquired Bitcomp in the summer, what kind of synergies do you see there to the rest of the business? And other question to that, do we see that the SaaS is a possible new business model for us?
Yes. I would say the #1 synergy is that now together, Sitowise together with Bitcomp forms the finish leading GIS, so Geographic Information System player. So of course, we will be first the leading 1 there, and that's, of course, a big advantage for us also growing in that segment further. There's also a huge need for these kind of solutions in the market. And then secondly, it's definitely the SaaS business opportunities. The Bitcomp company is now clearly also focusing on these ones and have been successful, and we see that there's a clear path on awards with the SaaS business. And of course, our aim is to continue to grow that business, our existing business, but also we are all the time learning from the SaaS business model, and I'm sure that will be also bringing us interesting new opportunities.
Thank you, Heikki. I just got the message that Johan would still like to ask one question from the conference call. So we can take Johan now.
If you could help me just bridge. If you look at the FTE average, in the quarter. I think it was up 29% something year-over-year and sales up 11%, even though we take into account the billing ratios, sick leaves, et cetera. Can you just help me understand how that happens?
Yes. Of course, what comes to the number of employees. So we also had some fixed term summer workers that came during the second quarter and then we had the acquisitions. But maybe Heidi, you can also complement on this.
That is one of the main reasons behind it and then, of course, we do have the -- we have the same, as already mentioned, with the -- with this increase, of course, impacting and the utilization rate taking down on that.
But is that -- I mean, this is a bit too hypothetical, but I think it's important for us to understand what sort of -- did it impact your revenues like your EUR 10 million or for sick leaves?
No, it did not impact EUR 10 million. Like if you look at compared to last year, the impact that Heikki already mentioned, is close to EUR 0.5 million is actually going through from our revenue to our EBITDA.
Okay thank you, Johan. Then we have one last question at least now here in the chart, and it's from [ Daniel Albin ]. Could you elaborate a bit regarding the order book intake? How much of the 22% year-on-year increase is organic? And how much comes from the acquisitions? .
Yes. Maybe Heidi, you can take this one, yes?
Yes. In the presentation, I said that it's mainly the growth, both from beginning of the year and also year-on-year is organic and it is around 80%.
Okay. I have no further questions in the chat. So we can wrap up, Heikki, if you wish.
Yes. So as I said, of course, we see that there's very good demand for the services we are providing, and we'll continue to capture that one. Clearly, we are in line with our earlier guidance and naturally the profitability is one of the key elements where we focus going forward. Thank you.