BofA warns Fed risks policy mistake with early rate cuts
Cavitec reported a substantial improvement in its net profit for the full year 2024, rising to €3.8 million from €200,000 in 2023, despite a 3.2% decline in revenue to €51 million. According to InvestingPro data, the company maintains a GOOD financial health score, with the stock currently trading at €16.89 and showing a solid 12.59% year-to-date return. The company’s cash flow also saw a significant boost, reaching €6.2 million compared to €1.9 million in the previous year. The order intake for the fourth quarter rose by 51% year-over-year, contributing to a full-year increase of 13%. These results underscore Cavitec’s strategic shifts and ongoing transformation efforts.
Key Takeaways
- Cavitec’s net profit surged to €3.8 million in 2024, up from €200,000 in 2023.
- Full-year revenue decreased by 3.2% to €51 million.
- Q4 order intake increased by 51% year-over-year.
- The company is launching new products in 2025 and expanding its market presence.
- Strong demand is driven by emissions reduction regulations.
Company Performance
Cavitec’s performance in 2024 reflects a significant turnaround in profitability despite a slight decline in revenue. The company’s strategic initiatives, including management restructuring and transformation programs, appear to be yielding positive results. InvestingPro analysis reveals the stock generally trades with low price volatility, making it an interesting consideration for stability-focused investors. Get access to 8 more exclusive ProTips and comprehensive analysis through InvestingPro’s detailed research reports. The increased order intake, particularly in Q4, highlights strong market demand, driven by regulatory pressures for emissions reduction and interest in noise reduction technologies. Cavitec’s focus on expanding its service engineering resources globally and its leadership in automated mooring systems further bolster its competitive position.
Financial Highlights
- Revenue: €51 million, down 3.2% year-over-year
- Net Profit: €3.8 million, up from €200,000 in 2023
- Cash Flow: €6.2 million, up from €1.9 million in 2023
- Q4 Order Intake: Up 51% year-over-year
Outlook & Guidance
Cavitec is optimistic about its future, with plans to launch new products in 2025, including a showcase at the Bauma exhibition. With the next earnings announcement scheduled for April 23, 2025, and analysts forecasting 2% revenue growth, investors can access detailed forward-looking analysis and Fair Value estimates through InvestingPro’s comprehensive research reports, available for over 1,400 US equities. The company is expanding its shore power solutions across European ports and has secured a significant order for electric vehicle charging stations. Cavitec is also exploring M&A opportunities and targeting growth in its service business, anticipating continued strong demand for its offerings.
Executive Commentary
CEO David Pagels emphasized the ongoing nature of the company’s transformation, stating, "We are not done with our change programs. It’s an ongoing story." He also highlighted Cavitec’s alignment with societal needs for zero emissions and sustainability. CFO Joakim Walquist noted, "We are not satisfied with our profitability and we are in no way finished with the transformation of CABOTEC."
Risks and Challenges
- Supply Chain Issues: Potential disruptions could impact product delivery.
- Market Saturation: Increased competition may affect market share.
- Macroeconomic Pressures: Economic downturns could reduce demand.
- Regulatory Changes: New regulations may require additional compliance costs.
- Currency Fluctuations: Exchange rate volatility could affect financial results.
Q&A
During the earnings call, analysts inquired about Cavitec’s potential for growth in the U.S. market, the momentum of order intake, and the possibility of relocating its office from Switzerland to Sweden. These discussions reflect a focus on expanding market presence and optimizing operational efficiency.
Full transcript - Computacenter PLC (LON:CCC (WA:CCCP)) Q4 2024:
Conference Moderator: Welcome to Cavitec q four report twenty twenty four. For the first part of the conference call, the participants will be in listen only mode. During the questions and answer session, participants are able to ask questions by dialing 5 on their telephone keypad. Now I will hand the conference over to CEO David Pagels and CFO Joakim Walquist. Please go ahead.
David Pagels, CEO, Cavitec: Good morning, and welcome to Cavitec’s fourth quarter presentation. I’m David Pagels, the CEO of Cavatec and I’m here together today as normal together with my CFO Joakim Balkvist. Let me start with a short introduction to Kavatech. This year we are celebrating an important milestone. It is now fifty years since Kavatech was founded and these years has been characterized by innovation and building long term customer relationships worldwide.
We are specialized in developing, designing and delivering electrification and automation solutions to different industrial solutions. We are offering we are target, with our offering we are targeting a number of industries and the Ports American sector has developed as the largest customer segment today. Our business is characterized by long customer relationship and over the years we have built a large installed base worldwide. This large installed base today gives us a great opportunity to grow our service business going forward. In this service segment, we have a broad offering covering everything from service, installations, maintenance, and system integration.
During 2024, we have increased our resources in services in service field by recruiting new skilled service engineers across the globe. With more resources, we build a solid ground for further expansion in this field. We operate across the world and last year, 50% of revenue was generated by European customers, 40% from the Asia Pacific region. America represents the rest, approximately 10%. In 2024, we made our first installation of automated mooring systems in Chile in South America.
So there is a clear potential for us also to grow in that region. Let’s turn to the next slide and remind you about our megatrends that drives our exciting market. The megatrends that drive our market are the urgent need to reduce greenhouse gases and also noise in critical infrastructures such as ports, container terminals and onboard vessels. Noise as an environmental problem is not maybe in everyone’s focus, but it’s actually growing area of interest and concerns for ports and other areas such as the heavy duty vehicles. Research show that noise has a negative impact on health and therefore becoming more and more a driver of our business since our solutions also support the reduction of noise in different industrial applications and heavy duty vehicles.
A key driver for our business is the fact that these megatrends are supported by international and local regulation that enforces operators of ports, terminals, vessels and other industrial operators to reduce emissions, pollution and noise. We operate within market segments that are critical to society and there and where our solutions are needed to lower emissions and create a better environment. CamoTek plays a significant role with our solutions and leading technologies that are proven, reliable, efficient and safe and therefore perfectly suited to meet our customer requirements. Let me shortly present our two business segments. First, Ports America as a world leading solution for ports, ships and other marine applications.
We have a unique systems for example, automated mooring, shore power, crane electrification and connection and charging system, significantly improving our event in the environment in ports worldwide. Customers include, of course, in this case, ship owners, operators, ports and terminals, port equipment manufacturer and shipyards. Ports and Maritime is our largest segment and stands for the majority of the group sales and EBIT as
Laura Motadi, Analyst, ABG Sundal Collier: of
David Pagels, CEO, Cavitec: today. However, we also have the industrial solutions that drive productivity and contribute to customers operational efficiency, electrification, as well as occupational health and safety. The products for the industry segments, include motorized cable and host reels, radio and remote controls, power connectors, spring driven cable and host reels. Customers in a wide variety of industrial sectors such as cranes, energy processing, transportation, surface and underground mining and tunneling. Service is, as I already mentioned, an integrated part of our business segment.
So over to some recent business goals. As you probably already seen, we reported a strong order intake of 51% up in the quarter. This development is a lot extent driven by strong demand for shore power solutions in Europe and the need to reduce the negative climate impact of shipping. As you probably also noticed, we have recently announced shore power contract with a total value of €17,500,000 You should, however, note that this contract was signed at the end of twenty twenty four and is included in our order intake for the fourth quarter even though we announced the contract in early twenty twenty five. These contracts include five Mediterranean ports, of which were which three in Italy with a combined order value of €13,500,000 and a global shipping company with a contract worth €4,000,000 All these orders are to be delivered over the next two years.
The order we signed for automated mooring system in Port Of Dublin is also a milestone to us since it’s the first installation in Ireland and we will serve as a benchmark for suitable post operations in the region. For the industry sector, we also announced an order with Quello, who is managing charging solution for electrical vehicles across Europe. The order encompasses 1,000 spring cable reels for coil charging stations. This is yet another sign of our business is driven with the need to reduce the emissions and increase the electrifications. I must say I’m quite happy to show you this graph.
As you can see, we have succeeded in our transformation of Kavatech and we are steadily improving our performance. Having that said, we are not done with our change programs. It’s an ongoing story. We still have a lot to do in order to improve our processes and performances. The change programs we implemented two years ago are still ongoing across the group.
Potemaritime was the first out with implementation of this and there we see now the results and now industry segment followed just recently in 2024. Thanks to our improved profitability, we have been able to focus a lot more on product development in 2024. We have, often in close cooperation with customer, developed new products that are in the pipeline to be launched this year. I’m excited about the products we will present announced during the coming year. As you have seen, we have appointed two new members in the Cavitec management team.
Niklas Wedeen as the head of Coton Maritime and Yonatan Erich as the head of the industry division. Full focus on sales for those two guys. Patrick Maris, previously head of Ports and Maritime, has been appointed as the new CTO and head of product development. Already a year ago, Jorgen also was appointed as Head of Global Operations and Patrick Bodin will continue his good work on the service field. With these changes, we have an organization with a clear responsibility across the group, which will improve our efficiency and resource allocation and make it possible for us to take advantages of the synergy effects.
I’m convinced that with a new structure and responsibility together with high energy of in the management team, we have a solid foundation to continue the growth. Just some numbers before I hand over to Joakim to give you a little more detail in the figures. As I already said we had a strong order intake in the quarter, 51. And as you know, we have started to review the order backlog in 2023 to secure a high profitability going forward. This work completed and we are and it’s good to see that we have a quarter now with increased order backlog again.
Done with the cleaning and work to now move on with a healthier order backlog. The adjusted EBIT margin continued stable improvement and the bottom line with the reported a quite substantial improvement from EUR 200,000.0 to EUR 3,800,000.0. So with this short introduction, I hand over to Joakim to walk us through the numbers a little bit more in detail.
Joakim Walquist, CFO, Cavitec: Thank you, David. We start with the revenue and we have seen a stable improvement during the year of 2024 even though we in the quarter is down 15% versus a very exceptional strong quarter in Q4 twenty twenty three. Revenue for the full year was down some 3.2%, which is largely a result of our more stringent order intake process where we have focused much more on profitable orders. When looking at this graph, I want to stress, which I’ve done many times before, that we are to a large extent a project driven company, which means that we cannot rule out that fluctuations between the quarter will happen on our revenue. So move on to the order intake.
The graph at the top of the slide really shows a good order intake. We reported here in Q4 an order intake up more than 50% from the same period last year. So very busy quarter. We also see here the order intake is up 13% during 2024 compared to 2023, which is also good news. This is driven by a very good demand for our shore power solutions, but also an increased demand for our service offerings.
The graph at the bottom of the slide also demonstrates that this higher order intake have generated increase in the order backlog. I would say now that we are mostly done with what David here called the the cleanup exercise of the backlog, and we now feel comfortable with the margins that we have in the in the order backlog. And we are now ready to slowly but surely press the gas pedal a little bit more on the order intake. So let us move on to profitability. As David David has said, we have over the past two years made significant progress in improving our profitability.
I think this development is a clear result of the change programs that we have executed throughout the company. EBIT did slightly decrease in the quarter twenty, versus 2023. But I think the big story here is really 2024 versus 2023 where we have done an improvement of over 50% in EBIT. We have show we have chosen also to prove, to show the cost of our investigation of a potential move of our registered office from Switzerland to Sweden as a non recurring cost. We will also continue to report these costs separately as in non recurring.
I also want to underline one more time that we are happy but not satisfied with our profitability and we are in no way finished with the transformation of CABOTEC. We have a lot more initiatives and improvement activities on our to do list which will continue to further improve the value creation. Let’s move on to net profits and earnings per share. As you can see also the net profit improved in the quarter compared to the previous quarter in 2024. We can see that for 2024, we have made a significant improvement in both net profits and earning per share from a very small net profit in 2023 of €200,000 to EUR 3,800,000.0 now in 2024.
Let us have a look also on the cash flow. As you can see from the chart, we have quite substantial fluctuation in operating cash flow over the year. This is really due to the project nature of our business and the completions of our projects and customer payments. If we look at the full year and the cash flow has improved quite significantly to 6,200,000.0 from the €1,900,000 in 2023. This is, of course, satisfying, and we’re beginning to really see the effects of all the work that is being done, but we will continue to focus, of course, on on the cash flow and working capital also in 2025.
Now we turn to the PNM have demonstrated a very stable improved performance over the past quarters. One should remember though that especially the ports and maritime business is to a large extent a project business and it can fluctuate quite a bit between the quarters. Profitability has improved nicely since we initiated the change programs and should be looked at really over the full year 2024 to get the better picture. The good order intake in the fourth quarter, as David has mentioned earlier, shows that we have a continued strong demand for our solution and that it’s also a testament of our continued competitiveness in the ports and maritime segments. So let us move over to the industry segment.
The acceleration of the change programs in the industry segment started in 2024 when David and Jonathan Ericsson (BS:ERICAs) took over the division. And there’s now a number of activities ongoing on improving internal processes, enhancing the products and our service offering and strengthening the sales force. Our target is of course to do the same journey as we have done with the ports and maritime segment, and I feel confident now that we are on the right track with this work. By this, I want to hand the presentation back to David.
David Pagels, CEO, Cavitec: Thank you Joachim. Let me briefly summarize our key strategic priorities. We are, as Joachim said, we are, we’re not, we are not done, with execution of the CHEESE program, but we are well, way on the journey. We have a continuous group wide initiatives going on. And in addition, we have a strong focus on the industry segment, where we clearly want to see the same development as we have done on Port America.
Among the group wide initiatives are improvements of sourcing and supply chain, where we identified a number of areas where we have taken action or intend to take action short term. We have an exciting pipeline of new products that will be presented and launched during the year, which we believe will be strengthened our competitiveness. And we have started during 2024 with our extended service offering, which has proven to be a rewarding strategic decision. And we see that there is a good potential for us to managing our installed base globally and harvest on that. The good thing with the installed base is also that it’s growing every month, every quarter, every year.
And finally, as Joakim said, cash flow and working capital continue to be the key focus for us also in 2025. So let me just quickly summarize some of the key points about Cavitec before we open up for questions. We see a good robust underlying market demand, which our recent announced orders clearly demonstrates. We have by the latest changes in the capital management team created an energetic, experienced team and an efficient organization, which is the foundation for our continued success. Our steadily improved profitability shows that we have made the right strategic priorities and the company is now set and ready for exciting journey ahead of us.
And finally, we have an attractive offering which perfectly match the needs for the society to transition to zero emissions and a more sustainable world. By this, we have come to an end of our presentation, and we welcome questions over the phone or by mail through the web
Laura Motadi, Analyst, ABG Sundal Collier: cast.
Conference Moderator: The next question comes from Laura Motadi from ABG Sundal Collier. Please go ahead.
Laura Motadi, Analyst, ABG Sundal Collier: Hi. Laura here from ABG.
David Pagels, CEO, Cavitec: Good morning.
Laura Motadi, Analyst, ABG Sundal Collier: Firstly, it’s very promising to see that you had a strong order intake in the quarter. And as you mentioned, Q4 is usually a stronger quarter for Capitec and that Capitec is also an order driven business. So we should see some variations between quarters basically. But what can we expect in terms of orders going forward? And my question is how should we look at this high order intake level from here?
David Pagels, CEO, Cavitec: I think thank you, Laura, for the question there. What I see is that we had a 2024, which finished very strong in the quarter. And as you say, normal for us, but at the same time, a little bit abnormal because it was really a good uptick there. At the same time, there is a lot of those trends that is supported by regulations and and, and in many cases, customer want to be seen as green. They want to do the right things, and therefore, they they really want to rapidly move over to shore power solutions, etcetera, in order to to do their part of the journey that we the global world has ahead of it.
We see we had a strong order intake for the for the power moves and the shore applications in in Italy, in the quarter. We see now the same trend continues in Italy and then also going to be spreading out along the coast of Europe and also see other countries to follow the same pattern there. So we believe that the high intensity on the market and the high demand for our product and our solutions in the market will continue over the quarters and years to come.
Laura Motadi, Analyst, ABG Sundal Collier: Okay. Thank you. Very clear. And you just mentioned that you’ve seen good momentum in the power and the short power side. But what can we expect here in terms of order momentum in the industry side?
Although the industry orders were up year on year, they were sort of flattish sequentially. So could you maybe talk a little bit about what you’re seeing on the demand side on the industry segment?
David Pagels, CEO, Cavitec: On the industry segment as Joakim mentioned before, I took over together with Yonatan Ericsson. We took over the industry segment during 2024. We have done a lot of activities there in order to engage the team and make sure we have the right the right people in front of the customers, that we have the right sales tools, that we have the right, tools in the toolbox, so we say. And therefore, we see a completely upgraded momentum in the activities also on the industry side. In addition to that, we’re also launching a number of new products.
Some will be launched in Bauma exhibition in April, and some others to follow through the year, which will then also complement and and, broaden our, our offering for the solution for our customers there. So I’m I’m positive to them to the industry segment development. I’m very excited to see what we can what we can do with it, with with efforts. Again, you don’t change things overnight, I think we have had a good part of 2024 to mobilize and we are ready to go and done. I’m confident 2025 will be the year when we do the same trend change as we’ve done, as we’ve seen on Ports America.
That’s going to happen on the industry side.
Laura Motadi, Analyst, ABG Sundal Collier: Great. Very clear. Thank you. And then I just have one on your geographical sales spreads. The majority of your sales is currently in Europe and Asia, and but you have some 10% in The U.
S. Too. How do you see the growth potential in The U. S? And what are you seeing under the demand side particularly in The U.
S?
David Pagels, CEO, Cavitec: We see The U. S. Market and we all I think we all need a bit reading the news day by day in terms of tariffs and tolls and and it’s a little bit changing in in the, the the scene is changing a little bit around the world. That’s clear. We still think that US has a good underlying strong market demand.
We are, of course, looking into how can we how can we, solve them, how can we serve The US market also where by by being local in order to avoid potential things that might be set up? So, I see a positive, I see a positive trend also in US, and we’re already well set up to meet that. On the radio side, we have a lot of activity going on also in U. S. Where we see that and also on the water maritime side, we have also interesting prospects in the order intake pipeline that gives us a good and positive outlook to U.
S. Over 2025.
Laura Motadi, Analyst, ABG Sundal Collier: Okay. Thank you. That was all from my end. Thank you very much.
Joakim Walquist, CFO, Cavitec: Okay. Thank you, Laura.
Conference Moderator: As a reminder, if you wish to ask a question, please dial 5 on your telephone keypad.
David Pagels, CEO, Cavitec: Okay. We have a question here from Juan Pablo.
Conference Moderator: More phone questions at this time. So I hand the conference back to the speakers for any written questions and closing comments.
David Pagels, CEO, Cavitec: Okay. I was a little bit quicker than the moderator there. Sorry for that. We have a question here on the on the written questions, from Johan Evelev. Congratulations for the result and the way forward.
Good. Did any business orders, get rolled out rolled over from q four to two q two twenty twenty five? Yes. We have, to some degree, not the majority or anything, but, of course, we have always, as Joanne Kim explained before, we are in the product business, and sometimes orders are slipping in from one quarter to over to another quarter and from one from one year to another year. But we didn’t have any extraordinary.
We’re just a normal pattern that we normally see, and that is also what we are planning for. With the cash flow and debt levels throughout transformation work much improved, does the company consider need an acquisition to complement the portfolio to further grow top line and profitability and to a further improved role as a system integrator? What we’ve done there and that is not a secret, but we have used in the last two years in order to do the change programs, to shape up things, to clean up so that we have now a healthier order backlog. And we have and also, as you can see, as a result of that, we have completely different degrees of freedom when it comes to our financial figures. And, of course, we have we will look into, mergers and acquisition opportunities.
We haven’t really had the bandwidth before, and we didn’t really have the freedom due to our performance if you look back to 2022. But definitely in 2025 and onwards, we have now dedicated resources, which looking into strategy and M and A. And of course, this is something which we are which we’re looking into, and I see there is a possibilities. There’s a lot of possibilities for us as a company to grow both organically, but also then through through acquisitions. So clearly, it’s something which we are now paying much more attention to and are involved in.
Are you disclosing or setting targets for service part a service portion as a part of their business internally going forward. We as many companies, we see services an integrated part of our maritime as well as the industry. And we want to keep it that way because it’s the same customer and it’s the same product that we are then servicing in the field. So we will continue to report the service business into the two divisions. We see a growing opportunity to intensify that within especially industry.
And as I mentioned before, the more we grow our large our installed base, the more room you have to also harvest on the service feed. But it will be a part and it will be an integrated part of the two main divisions. And here comes a question for you Joakim. Are the total cost for the company moved to Sweden estimated to exceed over 2,000,000 reported? And will those go and will those then be taken in Q1?
Joakim Walquist, CFO, Cavitec: Right now we’re still in the evaluation phase. So, of course, there will be some cost connected with a positive decision. But we right now, we are we’re not disclosing any any specific numbers around this. We’re still evaluating the the situation. And, but we will continue to report it as recurring nonrecurring given the the fact that we would take a positive decision around this and actually go ahead with the with the move.
David Pagels, CEO, Cavitec: Okay. And then we have another question here from Johan. Then finally, given the relative growth and the momentum in The US, has Cabotec increased its personnel and sales service staff levels to increase the large potential to exceed the 10% in US? And the answer is clearly yes. We see US as a market where we can grow significantly.
And we have added salespeople, we have added people, sales support engineers, etcetera, in U. S. And that we will continue to do in U. S. As in all areas where we see the opportunity to grow the business.
Joakim Walquist, CFO, Cavitec: We have one last question here also. Port of Dublin signed an order for automated mooring. What development do you foresee in this part Of Europe? Can we expect other ports to follow?
David Pagels, CEO, Cavitec: Port Port Of Dublin, as you know, in the when it comes to the automated mooring system, our moor master is is the is the market leading solution there. And therefore, of course, we, as I mentioned, last year, we integrated the the the, in San Antonio in in Chile. And now we have this, again, big installation going on, coming up now for for Port Of Dublin. Port Of Dublin is an important customer. And we have seen when we have those Moore Master installation, it drives a lot of attention from other customers to come and visit.
And we have had a lot of customer visits to our system, more and more installation. But the closer we can show how well this this technology really works and how satisfied the customers are, of course, the easier it will be to also convince other customer. It’s a little bit of a conservative business, but at the same time, it’s with so many installations we have now worldwide, I’m confident that also the Port Of Dublin will be a good reference and also to be a good marketing potential for our more master solutions.
Joakim Walquist, CFO, Cavitec: I think that was the final question that we had here in the in the feed. If no other questions, then I believe we
David Pagels, CEO, Cavitec: we are lucky for today. We want to thank you all for listening in, and I’m, I’m really excited to to, take, Cavitec during twenty twenty twenty five to the next level. I think we are in a good position for it. It will be a lot of focus on what we can do in order to satisfy customers and and increase our offering. And then have a we have really an exciting year ahead of us, Joachim.
That’s that’s key.
Joakim Walquist, CFO, Cavitec: I’m looking forward to it.
David Pagels, CEO, Cavitec: Thank you very much for listening.
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