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Investing.com -- Shares of Kontron surged by 6% following the company’s release of its first-quarter financial results.
The technology firm reported a significant increase in EBITDA, which rose by 36% year-over-year (YoY) to €48 million, surpassing the consensus by 19%. This growth was primarily driven by an improved gross margin, which climbed to 44.0% from 41.3% in the same quarter last year, reflecting a higher proportion of margin-accretive projects in the Software (ETR:SOWGn) + Solutions segment.
Kontron’s net income for the first quarter also saw a substantial increase, rising by 23% YoY to €20.1 million, which was well above the €14.1 million consensus. The improvement in net income was supported by the company’s strong gross margin and growth in the Software + Solutions segment, which reported a 27% YoY increase in revenue and an EBITDA margin of 19.9%.
The company’s order backlog demonstrated stability, reaching €2.2 billion, a 5% quarter-over-quarter (QoQ) increase, with a book-to-bill ratio of 1.28x. This backlog suggests a healthy pipeline for future revenue. Kontron’s first-quarter revenue was €385.4 million, an 8% YoY increase, which was almost in line with the company-compiled consensus of €385.6 million.
Kontron’s performance across different regions also contributed to the positive market reaction. In Europe, revenue increased by 2% YoY to €196 million, with an EBITDA margin of 8.3%, up from 5.3% in the first quarter of the previous year. Despite a 5% YoY decrease in revenue in the Global segment, its EBITDA margin remained robust at 8.3%.
The company’s financial position also showed improvement, with operating cash flow (OpCF) turning positive at €2.8 million, compared to a negative €10.7 million in the same quarter last year. Although free cash flow (FCF) was negative at €13.9 million, it marked a significant improvement from the negative €87.3 million reported in the first quarter of the previous year.
Kontron’s outlook remains positive, with the FY25 guidance issued in January still in place. The company anticipates sales between €1.9 billion and €2.0 billion and an EBITDA of at least €220 million. Growth is expected to be driven by the Software and Solutions segment, an acceleration in defense spending, which accounts for 5% of sales, and the continued ramp-up of wall boxes.
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