Garo AB
STO:GARO
| 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
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
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 |
19.54
45.64
|
| Price Target |
|
We'll email you a reminder when the closing price reaches SEK.
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.
Garo AB
You don't have any saved screeners yet
Ladies and gentlemen, welcome to the Garo Q3 results call. My name is Laura and I will be coordinating your call today. I will now hand over to your host Carl-Johan Dalin, CEO, to begin. Carl-Johan, please go ahead.
Thank you. Good morning, everyone. My name is Carl-Johan Dalin. I am the CEO of Garo and together with me I have Rickard Blomqvist, Acting CFO of Garo. And together we'll give the presentation of our Q3 results 2018. And we will let you know when we are changing pages as well. So moving from the front to the first page and a brief introduction to Garo. Garo is a company that designs, develops and manufacturers innovative products secured turnkey solutions for the electric installation market. We have a quite broad product assortment, you will see that a bit more of that later on. And are market leading within many product areas. Our operations is in Sweden, Norway, Finland, Ireland, Northern Ireland and Poland. Our production units are located in Sweden in Gnosjo and Varnamo and also in Szczecin in Poland.The HQ is in Gnosjo, Sweden. We divide our business, as you will see, into Garo Sweden and Garo Other Markets. And currently, the group employs 403 people in total.Moving on to the next page and the financial summary of the quarter. We summarized the quarter, where we have a sales growth of 16% mainly driven by organic growth. If you look at this growth it's -- EV-Charging is the strong driver in this especially in Sweden but also the construction related areas in Other Markets have grown in a nice way. While in Sweden we maintain a high level in the construction-related area.The EBIT increased 35% divided plus 26% in Sweden and 54% from Other Markets. The operating margin resulted in 13.4%, which is an improvement from previous year of 11.5%, which Rickard will come back to a little bit later on as well. And the operating cash flow SEK 29.5 million to be compared with SEK 8.5 million for previous year.Next page is on operational highlights. The EV-Charging is there we are seeing a strong growth in our markets, some of the markets are still small but their growth rate is high. And the interest of the product area is continuously increasing. So we can see that there is an increasing demand for EV-Charging and more advanced EV chargers. We also would highlight the deliveries we made of high powered DC chargers to Volvo Cars' test operation.We are also seeing, during the quarter, a very strong development in Other Markets where we have taken market positions and we've also strengthened the organization all in line with our strategy. Also during this quarter we have launched several new products really related to the DNA and the core business of Garo to be an innovative company. We have launched several new products within the EV-Charging segment but also several new products within the electrical installation segment.Also for those following us, we have discussed a lot lately during the -- about the production reallocation we made from Sweden to Poland during the end of last year. We can see here that we have -- we are benefiting from lower manufacturing costs and increased productivity, as well as higher capacity from the group this quarter, which is also resulting in the numbers we are seeing.Going to the next page, you can see the turnover split between our different product areas, where it comes to the electrical distribution products January to September '18 with 50% to our turnover. The project business or customized business is 25%, temporary power 8%, and EV-Charging so for this year it has grown to 17% of the total turnover.Going on to the next page to the financial highlights of Q3. I will hand over here to Rickard.
Thank you. Then we can summarize the financial highlights. Net sales increased with 16% mainly due to organic growth of 12%. Also we have some currency effect 3% and a very small effect from the acquisition of WEB-EL as announced [Technical Difficulty]EBIT, EBIT margin was strong 13.4% increase from 11.5% mainly due to better gross margins and some price adjustment to compensate for higher raw material prices and the Swedish [ SEK ]. Also we have the effect of the higher volumes of course. It's important also to point out that the third quarter last year was also affected by some extra costs to maintain a good service level for -- to increase the capacity of the manufacturing plants.If we move on to the earnings per share, it's a little bit weaker. It's mainly due to higher financial expenses as a result of revaluation of currency derivatives and we have also some effects from the deferred tax last year.Next slide, if we move on to Garo Sweden, we saw a good sales increase by 11% mainly due to strong growth in EV-Charging but also some modest growth in construction-related areas. EBIT increased by 26% and it's the same explanation with more or less higher volumes and [Technical Difficulty]Next slide, Other Markets. There we saw a very good increase in net sales, 26% and there we have a good development in all product areas and in all countries.Also we saw that EV-Charging a higher interest for EV-Charging in all of the other countries. And due to the high volumes and improved operating margins we increased EBIT by 54%.Next slide. If we look at cash flow and balance sheet then we have a very good cash flow in the third quarter SEK 29.5 million compared with SEK 8.5 million last -- third quarter last year. Mainly due to a better situation in inventory and account receivables.
Hello, the operator here. Apologies to interrupt. Would you mind moving closer to microphone so we can hear you a little better, please.
Okay. Also our net debt was SEK 67 million and also our [ solidity ] was improved to 55.1%. Next slide.
Yes, here we look at a slide which basically shows our different ways of growing. Just to comment a little bit about what has happened here in -- if you go back to say 1, 1.5 years, when it comes to acquisitions for those that are used to following us, when it comes to Nordic electric companies during '17, beginning of '17 we acquired a company named Emedius which is now part of Garo Group. We have also acquired a company called WEB-EL which Rickard mentioned earlier. We would put that into both or partly I would say to new additional products and product areas. But mainly also companies with an edge, WEB-EL is now part of mainly our product development team. If we go to the lower side of the matrix we shall see what comes to product development that a continuous development we are doing on our cross-selling products both upgrading and but also, of course, to keep a healthy portfolio.In related -- in relation to new and additional products, well of course, we were always looking at portfolio growth to broaden our portfolio and to have a more interesting offer. And when it comes to new business, new business divisions, we could mention obviously electric vehicle charging, but also solar. And new geographical markets, where we are moving especially with the EV-Charging out to, let's say, Northern Europe. And our vision and goal is to become the leading brand in our chosen markets and especially when it comes to the main products.Moving on to the final page and our outlook for the remaining of 2018, we can see that the demand for construction-related products in Sweden remains on a high level. I would say that when it comes to the Other Markets, it's combination of remaining at the higher level but also growing.We can see in Sweden that the growth curve is leveling off, there is still growth, but it's single digits and it's leveling off. And when it comes to Stockholm area, it's a slight slowdown that we can see in Q3. For the Other Markets as I said, the growth remains high and stable.When it comes to EV-Charging. We see a continued rapid growth in several markets. Some of the markets are coming from very low levels, but there is no question about that the electrification of the car fleet in Europe is ongoing. We are not waiting for the start its ongoing and it will continue, the interest is very high.So all in all, we continue to have a positive view of the market conditions in 2018. Thank you very much. And we are now ready for questions.
[Operator Instructions] We have a question on the line from Johan Nilsson Wall from ABG.
Yes, I wonder if you can help me out with one question regarding the sales list if you are looking by product area. And looking at EV-Charging, it's 17% and project business it's 25%. Can you give me something what's behind the numbers of those 2?
Well, that's -- I'm not really sure I understand the question, the project -- if I say like this, the project business is quite related to the installation business. So we are not, we are talking about basically customized electrical installation business when we talk about project business, just to be clear. So the EV-Charging is a standalone and of course, there is a non-project business also for EV-Charging, but then that is within the EV-Charging product segment.
If I put it like this. I was a bit surprised, of course, with the strong growth in EV-Charging, even if this is on accumulated basis, the figures for that. But I was also a bit surprised of a downturn in projects, if I put it that way, yes.
Yes, yes. Well, we have to remember that we are looking at a split. So it's a -- we have a quite nice growth, overall in the period. So but within the split, well it's a bit difficult to say, of course, you have some changes in mix, you can have some business there, if we go back 1 year, we had some quite heavy busy in the projects that was -- that carries a lot of turnover, you have seasonality effects and everything. When I look at the project business today, the demand in the market remains high. And if that would answer your question. When we look at Q3, we don't see a slowdown for the project business. Demand is high. And we are more working with our productivity and capacity rather than being concerned about the market conditions in the quarter.
Also a question about the ramp up in the EV-Charging it's on, when you launch just a power fleet, could you tell us if there is in the margin picture is it higher contribution margins for the new launches we have seen?
Well, it's -- would avoid going into those things and splitting up the segment. I mean, this is a very rapid growing market. But it's also a very -- you have a very rapid development when it comes to the product. I mean, when it is a quite new products area it's a new market. So the development goes on and on. I mean, it's -- coming from, let's say, a few years back it was simpler products then we could carry more and more intelligence in that. Of course, we will be -- we see this as an interesting area. And of course, as we put more, more value into the product the cost and the price goes up.
But you shouldn't say that's some hard explanation of the margin equally, it's more about what's actually mentioned text or is the EV-Charging at the launch also some part of that?
I would say more, more -- I mean, the increase of the margin it's partly related. I mean, it's related also to the volume growth and in the volume growth you have a substantial part of EV-Charging that's for sure. But it's not fully related to EV-Charging, no.
So about yes regarding the volume growth and the scalability, looking at the production condition about the capacity utilization in Poland and would you say that level that you see now, is there more to do on that front?
Well, I'm a production guy by nature so I mean when it comes to products you are never finished if you ask me. We have reached after the quite big moves and the ramp up we did in Poland we have reached a good level. But we are, of course, never satisfied. There is always more to do but we are on a good level now and that we can see in numbers, we can see it in service level as well. We also think that we have a very good position when it comes to our capacity right now and for the near future.
And is there any reason to think, it would be more unfavorable in Q4, so maybe is it opposite that's more likely regarding capacity utilization. If you look you -- some months ahead, is it more, I think it's more favorable or not?
No, I mean our situation regarding capacity not only related to Poland but I mean what we did during wintertime was to do I mean we expanded the factory in Poland last year. We moved Garo Elflex to newer facilities as well. To give ourselves more space and opportunity for further growth and as we see it right now and for the near future. We think we are in a good position to handle further growth. And then of course taking into account the service growth of EV-Charging as well.
I'm a bit curious about the things abroad, you are talking abroad of Scandinavia, how is it doing [indiscernible] Ireland.
Are you talking about EV-Charging or overall?
Yes, overall. But of course, I'm curious about the EV-Charging also.
Yes, I mean, if you look at the Other Markets so to say I mean, we have I mean the growth is good. We have opportunities in our different countries where we are present. I'm not going to disclose our strategies here, but we have opportunities in Finland, we have opportunities in Norway as well as Ireland and Poland. So, I think with the outlook for growth there is good, the market conditions are stable. When it comes to EV-Charging then of course, I mean we are looking at -- it's a product area which is probably a bit easier to move with to enter new markets. We have been talking about Northern Europe, how we want to be a player there. We have also talked about the way we do it, where we've partnered that with big international companies like [indiscernible] and it's progressing, it's progressing.
Again I had 1 final question about DC station and Volvo cars. You were saying that the product is -- yes the technology here, really high level here and also the output what you are quoting is the power output. Could you give us something about that in relation to -- to compare just -- that's all [indiscernible].
I would say that when you come to -- I cannot disclose any details about that for obvious reasons. But it's a project where you are on the very highest -- really highest levels when it comes to EV-Charging it's advanced product, the latest product and well of course when you move up in the segments, the number of competitors are fewer.
Yes, then we're -- you were talking about power output, is it more than we have seen before?
I cannot disclose anything that was not in the press release, sorry.
Our next question today comes from Kenneth Toll from Carnegie.
So the new products you are talking about on the EV side, could you explain, are those in the high voltage or semi-fast chargers or [ pole ] chargers and this -- the new products what kind of functionality do they add?
It's a bit difficult to talk about without getting quite technical. It's not related to, let's say, just a higher level or that kind of thing. It's more the functionality with the way they're communicating, it's regarding dynamic load balancing and how it's working. So I would say it's all over the spectra, it's [indiscernible] charges as well. And it's more regarding the functionality rather than just increasing power output.
So they are becoming easier to use and install and safer, basically.
It's smarter, they are more -- I mean smarter the development it's also I mean you have different protocols, of course, the way the communication is working with backend systems. So it's -- I mean both hardware and software development we're talking about.
The new products, do they have complete new design or do they have new model numbers like the LF -- what I think was your last where the -- it is -- high or is it more...
No, it's more development within the segments we are having. So just by looking at them, they are pretty much the same they are different products. So it's more so to say that we are -- within the current available products, more intelligence within.
And you also had some product launches outside of the EV-Charging. What are those?
It's different things. I mean, it's a bit different system it's different in the electrical installation. It is in timers, different energy meters, new cabinets. So the -- I mean we have a pretty broad portfolio so -- larger and smaller, but several different products.
Nothing in solar power, this quarter?
No. Nothing in solar this quarter, no.
Then you write in the outlook statement that you remain very positive for 2018 and there aren't so many months left. But then when we look into 2019 and if the building permits and building starts that have gone down, if they should translate to sort of lower sales to the residential construction side, is that something that you are worried about or that you are preparing for in some way? And if there should be a downturn of sales into residential construction, could you shift production resources to other areas or what's your thinking around next year and if a slowdown comes?
Okay, well first hold on -- I'm not going to give any forecasts today either. But I mean, of course, we are following all the relevant index and KPIs in the market. We are following the construction business and the development there all, but I think first of all, what we can see for next year when it comes to the market conditions is that we are quite late in the cycle, you should remember. So the exposure to the construction starts is I mean, of course, we have a [indiscernible] in connection with the level of construction. But we are late in the cycle. So it's a start [indiscernible] it's taking time for that. That said, what we can see for next year is that we think that the level -- we are still on high levels and the question would be whether or not there was any growth? But we will still be on high level. So we are not seeing, let's say, complete disaster or thinking [indiscernible] not even for the construction business. Also, what should we see -- I mean, what should be noted is that we have -- if you were to ask me, with the different situation it is where the construction starts probably decreasing, but we have a -- there is slow down in demand for new homes and that to me is the equation that it simply won't work. That, that has to be addressed. And but -- and then to come back to your question, what can we do. I mean, of course, we are following this. And by following this, we are also preparing. Can we shift resources in production? Yes, we can. And if we would have a fast-growing segment [indiscernible] we should very well shift resources to where we are growing.
And when we look at the split between the Polish plant and Swedish operations, is it -- now I'm just painting a scenario, but if the EV-Charging continues to grow very quickly and other parts of the business goes down, is there a risk that you will have one of the plants being very highly utilized and you may run into overtime and you have 1 plant being underutilized, then you have to lay off people and the effect that you get sort of an uneven split between Sweden and Poland or Swedish plants or something that's hard to sort of even out. You see where I am getting at?
Yes, yes. But I would say that we are already today we are quite balanced between these plants on what to do. It's not that one plant is specialized on one thing, just one product segment. But -- so we can use our resources. And I'm not seeing, let's say, any larger risk that we would grow out of the roof in one plant, but have nothing to do with the other one. We can rebalance our production without any big hassle.
And also now that the Polish plant is sort of inaugurated, it is up and running, the workforce is trained and it -- from seeing your margin, it seems like everything works well. And how much capacity could you increase from here without running into sort of a lot of overtime worries and difficulties that you had a year ago? Could you add maybe 20...
I'm not going to give you number, but I mean if we look at space and time and workload, I would say that we have a good position. We are available to grow, let's say, I mean, if you could look 1 year ahead I don't think we are going -- [indiscernible] let's say, capacity problem that would be too difficult to solve. So we have room for growth now after the investments made in the last year. It's kind of -- it's very difficult, I mean, to say too much especially about an area like EV-Charging where the growth rate in the market is so high. But we are aware of that and we still think that we have nice situation when it comes to growth.
And if we say in 3 years time or something if you are very successful and the growth is very strong, you could still expand your operations in Poland.
Yes. I mean we have -- if you would look 3 years ahead, I mean we are well geared for to take care of any growth to come in that, in the near future and we're well prepared for future growth as well both in Sweden and in Poland. We have been preparing and I really hope that we're going to have to invest more capacity.
And then if we look at balance sheet, I mean your cash flow is very strong now when we see both earnings coming up and also the inventory levels coming down after the move of production to Poland and so on. So are you looking more into acquisitions and spending more time to look for that now that the operations are -- is running better in Poland and everything and the balance sheet is stronger again?
I mean we -- when it comes to the cash flow and the inventory level, I mean we are doing what we said we would do. We wanted to [indiscernible] lower our service level. We had the production transfer that we've made. During that time, we increased the inventory. Now we are bringing it down to a level where it should be. And we can see that in the cash flow from this quarter. And then I mean if I would just come back to our other possibilities to grow then of course acquisitions is one area and it's something that we have done. We made 2 acquisitions in '17 and not made any decisions this year and that where we have been focusing on the capacity and getting the well-oiled machines running well. But of course, we're also looking for acquisitions as we are describing in the growth metrics.
[Operator Instructions] We currently have no further questions on the phone line. So I'll hand back to you, Carl-Johan.
Okay. Then I would just like to say for me and Rickard, thank you very much for listening in to our Q3 results presentation. I hope you all have a very good day. Thank you.
Thank you.
Ladies and gentlemen, that does conclude today's call. Thank you for joining. You may now disconnect your lines. Have a lovely day.