BTS Group - Pre-released Q1 EBITA well above our forecast

Q1 sales and EBIT of SEK 388m and SEK 41m… …representing 10% and 52% beat vs. ABGSCe Preliminary numbers suggest +6% on our ‘21e EBITA Sales +17% y-o-y adjusting for FX, EBITA +240% y-o-y This morning, BTS pre-announced its preliminary Q1 numbers for sales, EBITA and pre-tax profit. Sales are expected to amount to SEK 388m (10% vs. ABGSCe SEK 352m).

EBITA should amount to SEK 41m (for a margin of ~10. 6%), which is well above our forecast of SEK 27m (7. 7% EBITA margin).

Pre-tax profit is expected to amount to SEK 30m (vs. ABGSCe SEK 17m). Good development for its virtual solutions behind the results Sales grew 4% y-o-y and 17% y-o-y adjusting for FX.

Given the soft Q1’20 report, we argue that these number could be compared with Q1’19 as well, in which sales grew 3% and 12% adjusting for FX. According to the company, the strong Q1 results stem from good traction for its new, virtual solutions. We think that the company is enjoying a strong momentum is this regard, which also shows that BTS is not just good at helping out companies implement and shift their strategies; it can also adapt to changed market conditions itself.

In Q4’20, BTS was able to compensate 75% of the 70% of total revenues that were lost due to the pandemic, and this metrics was likely even higher in Q1. Full Q1 numbers due 19 May Based on the preliminary Q1 results alone, our ‘21e sales and EBITA would rise by 2% and 6%, respectively, following the announcements. That said, we think that consensus will extrapolate the strong Q1 results and could see double digit ‘21 EBITA estimate upgrades as such.

We will await the Q1 reports (due 19 May) before we make any estimate revisions as we would like to see the full details.