Vaisala Oyj
OMXH:VAIAS
US |
Fubotv Inc
NYSE:FUBO
|
Media
|
|
US |
Bank of America Corp
NYSE:BAC
|
Banking
|
|
US |
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
|
US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
US |
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
|
CN |
NIO Inc
NYSE:NIO
|
Automobiles
|
|
US |
Fluor Corp
NYSE:FLR
|
Construction
|
|
US |
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
|
US |
TopBuild Corp
NYSE:BLD
|
Consumer products
|
|
US |
Abbott Laboratories
NYSE:ABT
|
Health Care
|
|
US |
Chevron Corp
NYSE:CVX
|
Energy
|
|
US |
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
|
US |
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
|
US |
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
|
US |
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
|
US |
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
52 Week Range |
32.65
49.25
|
Price Target |
|
We'll email you a reminder when the closing price reaches EUR.
Choose the stock you wish to monitor with a price alert.
Fubotv Inc
NYSE:FUBO
|
US | |
Bank of America Corp
NYSE:BAC
|
US | |
Palantir Technologies Inc
NYSE:PLTR
|
US | |
C
|
C3.ai Inc
NYSE:AI
|
US |
Uber Technologies Inc
NYSE:UBER
|
US | |
NIO Inc
NYSE:NIO
|
CN | |
Fluor Corp
NYSE:FLR
|
US | |
Jacobs Engineering Group Inc
NYSE:J
|
US | |
TopBuild Corp
NYSE:BLD
|
US | |
Abbott Laboratories
NYSE:ABT
|
US | |
Chevron Corp
NYSE:CVX
|
US | |
Occidental Petroleum Corp
NYSE:OXY
|
US | |
Matrix Service Co
NASDAQ:MTRX
|
US | |
Automatic Data Processing Inc
NASDAQ:ADP
|
US | |
Qualcomm Inc
NASDAQ:QCOM
|
US | |
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
Earnings Call Analysis
Q3-2024 Analysis
Vaisala Oyj
In the latest earnings call, the company reported a solid performance with a net sales growth of 5% year-on-year, indicating resilience despite market challenges. The orders received grew substantially by 26%, pushing the order book to a record high, with an increase of 28% over last year. This substantial growth in orders reflects strong demand, particularly noted from a significant radar order in Spain and advancements in the Industrial Measurement segment.
The company's performance varied across its segments. The Industrial Measurements sector saw a 6% increase in net sales, underpinned by a 12% rise in orders received. Conversely, the Weather Environment division’s net sales grew at a rate of 4%, bolstered by a remarkable 36% increase in orders received. Notably, subscription-based sales also grew by 18%, highlighting the increasing reliance on recurring revenue streams.
The operating margin for the quarter was notable at 17.7%, slightly down from the previous year, attributed to unusual circumstances affecting last year’s figures. However, the gross margin remained robust at approximately 57.3%. This suggests a stable pricing environment and effective cost management, although the company is mindful of potential changes in input costs globally.
The company announced the acquisition of Speedwell Climate to enhance its subscription business offering, particularly in providing weather data to the insurance sector. Additionally, the introduction of new products, such as the cloud-based viewLinc system and the Vaisala Compass, positions the company favorably for future growth. These developments target critical sectors like life sciences and renewable energy, indicating a strategic alignment with industry trends.
Looking ahead, the company maintains guidance for net sales between EUR 540 million and EUR 570 million, alongside an operating margin range of EUR 68 million to EUR 78 million. There is cautious optimism around a recovery in North America, although the broader global economic uncertainties still warrant a cautious approach. The renewable energy segment has been reassessed to stable due to slower investments spurred by rising interest rates, yet the long-term outlook remains strong.
Overall, the company demonstrates a strong market position with solid performance metrics and growth potential. Investors are encouraged by the increasing order book, ongoing investment in innovations, and strategic acquisitions that promise to bolster long-term growth. While challenges persist in the macroeconomic landscape, the fundamentals reflect a healthy business poised for continued success.
Welcome to Vaisala's third quarter results call. I'm here with our CFO, Heli [ Liimatta ]; our Head of IR -- now I'm confused. Let's restart, I'm joined here with our CFO Heli Lindfors; our Head of IR, Paula Liimatta; and our Chair, Ville Voipio.
When we look at the third quarter numbers, as the headline said, it was a solid quarter with very strong orders received. If you dive into the kind of headline numbers, the net sales grew by 5% year-on-year. And I'll go into more detail, obviously, in where that came from and how it was split between the different business areas.
Orders received grew strongly, 26%, resulting in record high order book. And when if you compare the order book to the same time previous year, it's actually up 28% on the back of the Spanish big radar order, but also contributed by other things, and very happy to see also the development on Industrial Measurement side.
The operating margin result was on a very good level as well, 17.7%, somewhat down from previous year, but I think that I'll go into the why that was, but that there are -- if you remember, the last year's third quarter, it was the extraordinary situation where we did do a profit warning and that resulted in release of many of the bonuses, which actually contributed to in-quarter operating expenses, which, to a large extent, actually explains the difference between the 2 years.
Then on other notable things happening in the quarter was the acquisition of Speedwell Climate, which we acquired to expand our subscription-based business. It's -- Speedwell Climate actually is in a business of providing high-quality weather-related data to especially insurance needs. It's a company who is specialized on it.
We have been ourselves been moving into providing also our excellent world's leading weather data to insurance companies. But these acquisitions will obviously speed our access and give us also assets that we did not have before. And we see this as a great step forward in the strategy of expanding the subscription-based business overall.
You have seen this slide before. This is our strategy, mission, vision and strategy on one slide. This time around, I'll talk to you kind of the progress that we made on the products and technology leadership side. So we launched 3 very important products, which I think have also short, medium-term impact, but also a strategic longer-term impact.
The viewLinc Cloud is a first product, a continuous monitoring product that is fully in cloud and it really will help our life sciences customers to monitor alarm report on facility conditions and so on. The notable thing is now having this -- all this functionality, not also -- not only on-premise solutions as we have had before and continue to have, but also in a fully cloud environment, which obviously the world is moving towards. And it both complements our offering, but also it's a really important step for kind of having a leading -- continue to have a leading offering also in the future.
The Vaisala Compass is a weather-based decision-making platform for renewable energy. What it actually does in a plain English is that, for our renewable energy customers, especially the customers that are buying, for example, our LiDAR products, this platform now enables the ingestion of the data that our LiDARs produce.
It also enables post-processing and manipulation of that data so the customers see what they really -- what is valuable for them and how to -- and also how to integrate that data into their own platforms. And so really is a move -- very important move for increasing value-added to our LiDARs to our renewable energy customers, very important product and increasing our already leading offering in this space and furthering our lead on it. And it's something that our competitors would not have in it. So it's both short- and medium-term impact, but also a long-term impact, as I was saying.
Similarly, [ MGP231 ], which measures humidity and CO2 and is specifically designed to -- for applications like carbon capture utilization and storage. And while you may say that right now the CCUS projects are relatively small, they are more of a pilot-type exercises at the moment, even if some of them are in an industrial size, but it's a small industry at the moment.
That being said, if we look at climate change and what kind of solutions are must to reverse the trend and start to capture the carbon from atmosphere that the humanity has been releasing, especially in the industrial age, carbon capture is a must. It really is kind of a key part of the solution. And while the real industrial size and the scale of CCUS projects and solutions may be in some time in the future, it's crucial to be actually part of the pilot and the specification of how that industrial scale solutions are going to be made.
The MGP231 is a good example of how it's not only the business that we can make today, but how do you position yourself in a way that you are actually part of how the actual designs and the solutions that are going to be a large scale are going to be in the future in this specific case, CCUS, which will be bearing fruit in the years to come.
And I think it's -- if you are in this phase, then you know what your competition would not know, you are actually -- you understand the dynamic, what is really important in the process itself and so on. So really, really important strategically, not only short-, medium-term business, but strategically for our competitiveness for years to come.
Talking about the future, we also -- in the quarter, we announced the changes in the leadership team. And I want to use the opportunity to thank our long-term leader in industrial measurement, Sampsa, who has been instrumental in actually turning it from a relatively small, when he joined the company, it was about EUR 70 million business and we ended last year in EUR 230 million business.
So instrumental in increasing the value for the shareholders, transforming the company and creating together with his team, creating a completely new and different position for the entire company, not only in the Industrial Measurements and leaving a very, very solid foundation for his successor.
And so then Jarkko Sairanen will assume the role of Head of Industrial Measurements. And then on Weather Environment side, Anne Jalkala will take the kind of core part of it, which is weather, energy and environment is -- which consists both the traditional side of the meteorology as well as the renewable energy side. And then Samuli Hanninen continues to lead the Xweather side of it. And Samuli will also be part of the leadership team as of January 2025. All the changes are happening in January 2025. And I think we have a great team to lead and continue to execute the strategy and execute the strategy for growth.
Now let's look at the deeper dive into financials. Starting with the operating margin. Operating margin, as I said earlier, 17.7%, on a good level. The orders received very strong, as I said, and order book, as I said, on a record high level, 28% up compared to year before. Net sales increased by 5% year-on-year. And what was driving that was large orders received during the past quarters. And then it was very good to see also the growth of subscription sales, which now in-quarter was 18%, resulting in gross margin of roughly on last year's level of 57.3% and cash conversion continued on a very good level as well.
Now if we look at a little bit more deeper into the business areas, industrial -- starting with Industrial Measurements, it was very satisfying to see that the net sales growth continued, starting maybe from orders received, which increased 12% year-on-year and that resulted in order book being up by 5% when we compare to the year before. Net sales growth increased by -- to 6% year-on-year. And the gross margin, slight decrease compared to previous year and this is really explained by mix changes and normal shifts between the quarters. Nothing specific on it.
And EBIT being back on a very good level. So if you look at the EBIT percentage of being almost 27%, it's -- I'm very glad to see that we are back on those levels. On Weather Environment, I would say, a very solid performance, excellent result on orders received, up by 36% year-on-year, resulting in order book being 34% up compared to the end of '23 with the -- so the order book that we started the year with.
And then net sales increased by 4% when we compare to the year before. If we look at the -- where did the growth come from, mainly from large orders received during the past quarters. And then as I said before, the good result on [indiscernible] and a good growth on subscription sales.
Some decrease on gross margin, again, product mix and on this quarter, now higher share of project business compared to the comparison period a year before. And this resulted in EBIT margin of 11.1%, slightly down from the year before, but on a very good level.
Cash flow side, as said before, continued on a very good level. The cash flow of operating activities, some decrease, but this is really increase of -- coming back from an increase in net working capital on the back of -- kind of being back on growth overall from a sales side. We also did -- it's worth noting that we did a early payment of -- prepayment regarding our term loan in April. Cash conversion stayed on a very good level as well.
Then if we look at our track record from year-to-date, the net sales and gross margin are flat compared to year before. It's worth noting that this is on the back of a very challenging first quarter. So if you look at where we were on kind of end of first quarter and where we are now at the end of third quarter, I'm actually quite happy with the progress that we are now slightly ahead in terms of net sales compared to year before and likewise, slightly ahead in gross profit compared to the year before. And clearly, if you take the result for the period, then ahead of where we were compared to the same time previous year, obviously seen in the EPS as well.
I said before, this headline stays the same -- has been staying the same for a long time in our presentations, strong financial position and there's not really anything specific to highlight on our balance sheet side. Maybe the one thing to note is that the automated logistics center investment that we announced earlier is progressing according to the plan and the building is right outside of the window that I'm looking at is actually the cranes are building it and the roof is coming together as we speak.
So we are well -- progressing well on that project and obviously, will be giving us a good, good advantage on various different ways when it's done kind of middle to third quarter of next year.
Then into market and business outlook. No changes in market -- major changes in market outlook. Maybe one thing worth noting is we've moved renewable energy to be stable and this is on the back of -- as we can read in the papers as well that a little bit of a slower period of especially wind energy investments around the world on the back of high interest rates and so on has no impact on our view on renewable energy longer term that we still are seeing that as a major opportunity. And we are -- the investments into renewable energy are just in the beginning phase. And the need on investments on this going forward will remain very, very high kind of in the coming years.
And no changes in the business outlook. The net sales range that we estimate between EUR 540 million to EUR 570 million and the operating margin range between EUR 68 million and EUR 78 million. No changes on those.
And I want to finish this with just a advertisement on our Capital Markets Day, which is going to be held on November 11 at 2:00 p.m. here in Helsinki. So I would warmly welcome everybody to participate either on person -- in-person or online. We will be streaming the event as well. But obviously, being present here, we would very much welcome you and want to see you here.
And we will be organizing the next -- the following day for the participants an opportunity to see our production and our R&D facilities as well. So with that, I want to close this session and open up for questions.
[Operator Instructions] The next question comes from Pauli Lohi from Inderes.
First, I would like to ask about the Industrial segment outlook. If you look to the global manufacturing PMI indicators, there are some recovery in the spring, but the last few months have seen negative development in there. So I would like to ask how comfortable you are about your market guidance given some setbacks in general industrial activity indicators?
We obviously are very comfortable with the guidance. Otherwise, we would not be giving it. But seriously, it is a good question, Pauli. And if I give you a little bit more color in the guidance. So as we -- you may have seen in the release as well, what we have said is that we have been seeing early signs of recovery in North America now for past months.
It's still early recovery, but there has been a constant kind of enough evidence that I can say this. Does it extend into Europe or Asia? Not so much. But then again, the recoveries tend to start from North America. And then maybe the other comment is that it's still an early sign. So time will tell. I mean, it's easy to read the papers with all kinds of threats that can be there on economy and the world overall. But this is what we are seeing at the moment.
Then I would like to ask, could you share some color which kind of customer segments contributed to the high growth in the subscription-based revenue?
Thank you for the question. There's no specific customer segment per se. It really was across the board and there was no kind of a marked difference in different customer segments and so on.
Okay. Then about the new product you introduced to the carbon capture, how material sales would you expect from the new products in the next years? And is it more about the market growing to a larger scale? Or is it more about you establishing yourself and your new product in this space and industry?
I think it's both. I mean it's important to establish yourself in a right way in a emerging industry, which is exactly what we are doing here, with a belief that this is going to be a sizable industry when you look at longer term. It may be well in kind of some time before it's really a sizable industry, probably is.
But it is really important to establish yourself in the industry when the industry is forming. And that's why what I was trying to say with the prepared remarks that it really is kind of a strategic importance on long term and a good example. It's not the only thing that we are doing, but a good example of things that we are doing, putting in the seeds that we believe that will grow in the trees.
Okay. So you think that there is probably not yet material volumes to capture...
No, no, no. So if you look at the overall, the carbon capture industry, it's small. I mean, in the overall scheme of things, it is small at the moment. But it is forming. It is forming.
The next question comes from Atte Jortikka from Evli.
This is Atte from Evli. Thank you for the presentation which actually already answered most of my questions. But just more on the WE side, product sales fell slightly. Could you elaborate, was there any kind of timing elements involved with this quarter?
So just clarifying, I'm not sure if I heard you. So you were asking Weather Environment side, product sales?
Correct.
Okay. So there's always a little bit of a timing issue that is unpredictable in this type of a business where it's the type of a business, even if it's product sales, estimating exactly where they fall and when you deliver. And even if you may have, in some cases, even a frame contract, when do customers then pull in products and what scale, there's variation in between the quarters. So there definitely is a timing impact. And this is nothing new. This is something that we'll be experiencing over the years.
Yes. Understood. Then another kind of housekeeping question on Industrial Measurements side, on the service sales, you used this transparency wording.
Yes.
What -- can you elaborate on that, what that really means as a driver for service growth?
Yes. So Heli, maybe you will actually go into a little bit -- it's a great question, and thank you for it. And maybe I should have actually taken it up even in the prepared remarks. So thanks for the question. Heli?
Yes. So actually, if you look at the service growth, it's not as much as a growth driver, but actually something that the ERP has brought us. So previously, when there were service elements inside of a product sales, so it was installation, calibration, whatnot, it was not visible to us. And now with the ERP, we have more granular view and we can actually separate this better.
And that is why we have highlighted now also as one of the drivers. So if we think about, you can roughly say that 1/3 was related to the installed base growth that we have been talking about past quarters; 1/3 is this kind of visibility we now have and then 1/3 is related to more like on-site calibrations and so on.
The next question comes from Matti Riikonen from Carnegie.
It's Matti from Carnegie. A couple of questions related to your costs and I'll start with the timing that you mentioned in your report. So does it mean that fixed costs have increased now in the second half because you basically curbed some costs in the first half because the outlook was still uncertain and now you have started to kind of take those costs or kind of use that -- those reserved money for your purposes in the second half? So is this a kind of timing shift related to how your annual budgets are being used?
I would actually -- if I may answer this one. So I actually say that last year, if you look at it, we had more variation in the fixed cost between the quarters and the Q3 last year was abnormally low. And this is -- now we have a normal quarter. So if you actually look at quarter-on-quarter, we were still using less. And if you look at year-to-date, we're still at a minus 1% on the OpEx.
Compared to the previous year.
Compared to previous year. So no, the difference comes more from last year and the comparison than changing anything this year.
Okay. But when -- if I read the page regarding profit development, it says that fixed cost increased due to the timing of costs. So are you saying that the cost didn't increase because I think they did?
Compared to last year, they did because of the timing is different to last year.
And Matti, just to emphasize what Heli said, last year was the extraordinary. So if you look at sequentially, for example, there was nothing extraordinary in this. And I think if you look at overall, the year-to-date, from a cost development perspective, I think gives a good picture on where we are.
All right. And then the second part was the transaction-related costs. I was just wondering that how much did you spend on that so far, just to find the kind of deviation, what was kind of normal costs and what was a bit -- little bit of extra?
You are referring to the Speedwell, right?
Yes.
We did not say exactly what we -- what the cost of that transaction is. And Heli, I mean, if you want to elaborate it anymore.
Well, of course, I think we have -- it's Speedwell, of course. And then, of course, we have continuous -- if I look at anything, we have M&A costs. So we did highlight in the report that we had some extraordinary costs related to M&A. And then, of course, we had some small restructuring. So there is -- those are there as well. But we are not talking about extra material amounts, but so that they affect the comparison.
Right. And was it so that you have your own organization for doing M&A? Or are you using other external resources than perhaps lawyers to make the deal? How does it work at your end?
Yes, we have our own organization. But obviously, when you do due diligence, then you do need to use lawyers and sometimes also some bankers as well. So depending on the size and complexity of the case, it kind of varies as well.
All right. Then regarding the one new product, -- by the way, congratulations for the extremely catchy name for it, MGP241. That's...
Thank you, Matti. Isn't it?
I like that a lot. You must have a lot of [Technical Difficulty].
How did you guess?
But I was just thinking that when you describe the market potential that it's smaller in the beginning, but how is the process to generate this kind of thing? Can it be compared to, for instance, the hydrogen peroxide new measurement head that you introduced some years ago already? So is it a big exercise for you to make this kind of thing? And does it take always the same amount of time to actually make it happen? So what was the process behind that?
Yes. Great question. And so first thing is that there's a big variation on the timing and kind of effort on creating new products. And if you need to create new technology kind of in the silicon measurement sense, that takes a long time and it's a bigger effort. And in many cases, like in this, it's more of how do you package and then also develop the needed software to interpret whatever the measurement head says.
So -- and that's less of an exercise. It's still some investment, but it's much less of an exercise. And here, in this case, this is not like a -- you can't compare it to, for example, the hydrogen peroxide side. So it's less of a complexity. But it's -- nevertheless, it offers now capabilities that are needed in CCUS environment.
But at the same time, you have to remember that many of our products are used much wider than kind of a single use case. And this is the case in -- with this product as well, that it's not only for CCUS, but it is something which is kind of a state-of-the-art for the CCUS as well and which is the strategic importance and why I wanted to highlight it as well.
Okay. Fair enough. Then finally, on Industrial Measurement. Now that you have been fairly cautious in your estimates related to how the Industrial Measurement business is actually recovering from the slump that you ended up last year, do you think that the kind of trend which you expected in the beginning of the year is basically what you have seen so far? Or has it somehow changed that the traction would be kind of lower or higher compared to your earlier thinkings around that?
I think that's a good question. And I think it's to a very large extent, actually how we saw it from the beginning of the year. I think we said early in the year already that we expect some pickup towards the end of the year and that's -- and now we are giving a little bit more granularity on where exactly that some pickup is coming. So I don't think our view has changed really materially in any which way.
Right. But you are not willing to kind of flag that now the worst is over and then everything is looking sunny. I mean, you have been fairly cautious in --
Yes.
-- describing --
Yes. Yes.
-- the kind of trend there and there might still be -- I understand that you are trying to say that there might be still risks or --
Correct.
-- bumps on the road. Is that correct?
I think that's a correct interpretation. And like I said, while we are seeing some signs, kind of measurable signs in the pickup in North America, it's too early to kind of call a victory and kind of turning of the -- like sort of -- it would be back before last year kind of times way too early. And I also want to be cautious in terms of there are so many things happening in the world that can reverse the trend kind of as well. So I think there's a reason to be cautious overall in the economic development around the world, given all the uncertainties in the world.
The next question comes from Waltteri Rossi from Danske Bank.
Actually, only one follow-up question on the outlook of Industrial Measurements. If we look at the order intake, that was actually flat almost compared to the previous quarter. So when did you start seeing the improvements in the market? And in what form and what time inside the quarter?
We have been seeing it already kind of -- now when I look it back, it's already started kind of the previous quarter and it's part of what we've been saying, as I said to Matti just a second ago, that we have been kind of consistent on saying that we expect some pickup towards the end of the year. And we have -- this has been the case. And it's not only what we saw in the quarter, but also a little bit before as well.
And then you were asking in which form, it's a question of really the demand and demand for our products and specifically, this is industrial instruments where we are. So kind of the broader -- so it's not single industry, but a broader industry where these -- the use cases are.
Yes, yes. But what I'm just getting at is that there isn't any signs of the continuing recovery in the order book or order intake right now, but you still are confident that in Q4, the order intake is going to hike on a quarter level?
I think we are confident with our guidance in terms of what we have for the year obviously.
There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.
So thank you for participating. Thanks for great questions. And I kind of still one more time advertising the Capital Markets Day in few weeks. So I look forward to seeing you there. And other than that, a happy afternoon for everybody. Thank you.