StrongPoint - Strong organic growth, lower margin
EBITDA below, higher opex and (temporary) lower GM Strong organic growth in Retail Technology of 15% y-o-y Cons ‘21e/’22e sales unchanged, EBITDA down 4-7% EBITDA below due to more 3rd party products, higher opex Q1’21 revenues was NOK 296m, spot on consensus expectation of NOK 296m. The core retail technology segment delivered strong revenues of NOK 253m, corresponding to a strong organic growth of 15% y-o-y. Adj. EBITDA was NOK 20m, 23% below consensus at NOK 27m.
This corresponds to an adj. EBITDA margin of 6. 6%, which is down from an adj.
EBITDA margin of 7. 8% in Q1 last year (adjusted for a NOK 5m one-off in Q1’20). The reason for the miss on EBITDA is due to a lower than expected EBITDA margin in Retail Technology.
The reason is two-fold. Firstly, there was a higher share of sales from third-party products with lower gross margins in Q1 (this varies from quarter to quarter). And secondly, the company has continued to invest for future growth by hiring new sales personnel, which led to a y-o-y increase in opex.
15% organic growth driven by e-com and self-checkout The primary drivers behind the 15% organic growth in Retail Technology was strong growth in Sweden and the Baltics with large installations of Click & Collect lockers and self-checkout solutions. The group’s Spanish operations continues to be negatively impacted by the lockdowns, i. e.
once societies start to open up again from H2’21 this should give a positive topline boost for the company. The cash flow was good with cash flow from operations of NOK 21. 6m.
Short-term EBITDA estimates down, long-term story intact StrongPoint once again delivers strong organic growth in its core retail technology segment. This is the most important KPI to track for the long-term investor, in our view. Consensus short-term margin expectation are likely a too high as the company will continue to invest for future growth, but this is also positive for the long-term case.
We expect consensus to keep their sales e.