GuruFocus -
- Revenue: EUR429 million for H1 2024, 15.5% growth year-on-year.
- Organic Growth at CER: 12.8% overall, with North America at 26.2%.
- EBITDA Margin: Increased by 30 basis points to 19.7%.
- Gross Margin: Improved by 19 basis points.
- Operating Cash Flow: Improved by 35% to EUR58.3 million, excluding factoring impact.
- Net Debt-to-EBITDA: Increased slightly to 1.5 times from 1.4 times at the end of 2023.
- Capex: EUR12.9 million excluding one-offs, with significant investments planned in the Netherlands and Wichita.
- Earnings Per Share: Increased by 22.2% to $0.55 for H1 2024.
- Full Year Revenue Guidance: Upgraded to EUR850 million to EUR870 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Fagron SA (ARSUF) achieved a 12.8% organic growth at constant exchange rates, with revenues increasing to EUR429 million for the first half of 2024.
- The company's EBITDA margin improved by 30 basis points to 19.7%, reflecting synergies from acquisitions and operational excellence initiatives.
- North America reported a strong growth of 26.2%, driven by improvements in operational excellence and consolidation of the Letco facility.
- Fagron SA (ARSUF) upgraded its full-year revenue guidance to a range of EUR850 million to EUR870 million, indicating confidence in continued growth.
- Strong cash flow conversion with operating cash flow improving by 35% to EUR58.3 million, excluding the factoring impact, showcases solid cash-generating capabilities.
- Changes to the reimbursement system in Poland continued to impact results in the EMEA region, affecting profitability.
- Operating expenses grew by 17.5% compared to H1 2023, partly due to an increased workforce to support rising volume growth in North America.
- The net debt-to-EBITDA ratio increased slightly to 1.5 times compared to 1.4 times at the end of 2023, indicating a rise in financial leverage.
- The decision not to proceed with a $20 million investment in a new repackaging facility in Decatur may limit future capacity expansion.
- The company is facing increased regulatory scrutiny and quality requirements, which could impact operational flexibility and costs.
A: (Karin de Jong, CFO) The impact of Semaglutide shortages is around USD12 million for the first half, with a similar amount expected for the second half. Excluding this, Anazao's underlying growth was around 12% in the first half.
Q: What is the expected revenue capacity from the Wichita investment?
A: (Rafael Padilla, CEO) The Wichita investment will add $200 million in capacity, bringing the total to $450 million when combined with existing facilities. This will be fully operational by H1 2027.
Q: Could you elaborate on the factoring reduction and its future path?
A: (Karin de Jong, CFO) Factoring was reduced from EUR35.5 million at the end of 2023 to EUR19.1 million by June 2024. We expect a full-year saving of approximately EUR1.5 million from this action, with no further decreases planned for 2025.
Q: Have there been any impacts from the Medios acquisition of Ceban in the Netherlands?
A: (Rafael Padilla, CEO) There has been no impact from the Medios acquisition. Ceban was already a competitor, and operations have continued as usual.
Q: What is the outlook for M&A in the second half of the year?
A: (Karin de Jong, CFO) We continue to pursue a disciplined M&A strategy with a full pipeline of opportunities globally. While timing is uncertain, we expect to engage in additional M&A activities to support top-line growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.