Earnings call transcript: Lamor Q2 2025 sees stock rise despite revenue miss

Lamor Corporation Oyj’s Q2 2025 earnings call revealed a revenue shortfall, with the company reporting €21.1 million against a forecast of €23.85 million. Despite this miss, the stock price rose by 6.43%, closing at €1.49, suggesting investor optimism driven by strong order intake and efficiency initiatives. According to InvestingPro data, while the company wasn’t profitable in the last twelve months, analysts expect a return to profitability this year. The company maintains a healthy liquidity position with a current ratio of 1.74, indicating strong ability to meet short-term obligations.

Key Takeaways

• Revenue for Q2 2025 was €21.1 million, below the €23.85 million forecast.
• Stock price rose by 6.43% in response to strategic initiatives.
• Order intake increased by 49%, indicating robust future demand.
• Efficiency initiatives aim for €8 million in savings by 2026.
• Market sentiment remains cautiously optimistic despite revenue miss. InvestingPro analysis shows the company’s overall Financial Health Score is FAIR, with particularly strong scores in relative value and cash flow metrics. Get access to 12+ additional exclusive ProTips and comprehensive financial analysis through InvestingPro’s detailed research reports.

Company Performance

Lamor’s performance in Q2 2025 was marked by a significant increase in order intake, up 49% from the previous quarter, highlighting strong demand for its environmental protection technologies. The company maintains a solid gross profit margin of 40.47%, though revenue showed an 11.35% decline in the last twelve months. The revenue miss points to challenges in a volatile market, influenced by geopolitical risks and customer decision-making processes.

Financial Highlights

• Revenue: €21.1 million (below forecast)
• First Half Revenue: €40.2 million (slightly below last year)
• Adjusted EBIT: €2.8 million
• Margin for first half: 6.9%
• Order backlog: SEK 86 million

Market Reaction

Lamor’s stock price increased by 6.43% following the earnings call, closing at €1.49. This positive movement suggests investor confidence in the company’s strategic direction, despite the revenue miss. The stock remains within its 52-week range, reflecting resilience in challenging market conditions.

Outlook & Guidance

The company maintained its full-year guidance, focusing on strong order intake in the upcoming quarters. While revenue is expected to be below comparison in Q3, Lamor continues to negotiate equipment and service contracts, bolstering its future revenue prospects.

Executive Commentary

CEO Johan emphasized the strong market demand for environmental protection technologies, stating, "The market demand for environmental protection remains strong." CFO Nalla Stehmann addressed financial concerns, noting, "We are quite close to [the covenant], but we did not break any."

Risks and Challenges

• Revenue miss highlights market volatility.
• Geopolitical risks affecting customer decisions.
• High gearing ratio of 91% poses financial risk.
• Debt-to-EBITDA ratio close to covenant limit.
• Delays in project completions, such as the Kilpilhatti plant.

Q&A

During the earnings call, analysts inquired about the Kilpilhatti plant’s delays, which were attributed to process equipment testing. Questions also focused on the company’s debt position, with reassurance that efficiency initiatives would not compromise sales capabilities. For deeper insights into Lamor’s financial health and future prospects, including detailed debt analysis and growth projections, explore the comprehensive research available on InvestingPro.

Full transcript - Lamor Corporation Oyj (LAMOR) Q2 2025:

Tapio Besseland, Moderator/Host, Landmark: Good morning and welcome to Landmark’s Q2 webinar. My name is Tapio Besseland. With me today, I have our CEO, Johan as well as our new CFO, Nalla Stehmann, who is actually with us here for the first time in these results webinars. Welcome, Naur.

Nalla Stehmann, CFO, Landmark: Thank you.

Tapio Besseland, Moderator/Host, Landmark: Next, we’ll be going through or they will be going through the key takeaways from Q2 as well as the efficiency initiatives we announced this morning and also the focus points for the rest of the year. At the end, we will have the Q and A. So without further ado, Johan, go ahead.

Johan, CEO, Landmark: Thank you. Yes. Welcome to everyone on my behalf too. Just a glimpse of Q2, what we achieved during the first during the second quarter of this year. First of all, I’m very happy with the equipment and small service orders that was at a very good level during Q2.

The new orders increased with 49% compared to the comparison period last year. Also, growth that is driven by the environmental protection technology equipment and also, I would say that continued success in the, let’s say, sales and with our own resources and then also the agents that have been successfully now tuned to support our growth in respect to the environmental protection technology sales. Also, very happy with the largest the orders that we’ve achieved now from Africa that is connected to our growth strategic growth initiative and also several other orders that are supporting our strategy at the moment throughout the world. The profitability in H1 is above the comparison period. And however, then that the revenue is below the expectations, that is a decline driven by or caused by some of the larger impacts in Q2 twenty twenty four.

And also the revenue recognition from Kuwait that is slightly lower than what is what was in the comparison period. Adjusted operating profit is close to the comparison period, but the lower revenue level has caused this deviation compared to the comparison period. Overall, the profitability in H1 is better than in previous years, and that we are very happy about. The strategy implementation continues. However, the market that we talked about in the last Q quarter results meeting is that the market is still volatile and that we all know that, that has an impact on that part.

But we are strengthening our presence in Middle East with the Saudi service center, which is a very important stepping stone for us in proceeding with our strategy. And also that we have strategic wins in remediation in, for example, in South America and also in Europe, the first one in really remediation project in Europe that we won in Q2, which is a landmark, let’s say, step in proceeding with our strategy and spreading in the focus areas. The market demand for environmental protection remains strong, And that is due to the global situation. The risk levels in the maritime hotspots are still at a very high level that we’ve seen examples of during the during H1, for example. And then also that the global economic outlook is impacting the customers’ decision making, especially then when we are talking about larger initiatives.

And that means that the decision point is harder to estimate than previously. So the timing is getting more weaker in that respect. Strong momentum in the environmental protection part. I think that that is something that we would like to highlight here is that the, let’s say, the quarterly environmental protection revenue, excluding then the large project, has been continuously increasing since the 2023. There are significant technology orders in Q2 And then long service contracts in Q2, that is an example of a decade of customer cooperation that is now continuing.

And this is just a couple of examples in Angola and then Peru, where we have, let’s say, close to ten years of or over it will be now over ten years of cooperation with these customers. What is then the key drivers to this that we really are strong in the environmental protection part is that globally the brand is strong, the portfolio is recognized to be very strong, and then also the presence is global. So we are considered as a in many areas, we are considered as a local player. And that is becoming more and more important as we go ahead. Just to mention that if you are talking about environmental protection or protecting offshore areas in the Arctic region, Lammor has more than or close to 85% of the installed base in respect to protecting, let’s say, water areas in the Arctic region.

Then also that we have continued actively with ensuring that our own sales is efficiently organized and then also that we have an expanding the sales funnel and making sure that we are drawing upon the strong brand portfolio and presence globally. And then also in addition to our own sales force that the agents and distributors, how they are managed and an example was then Africa, for example, that this is becoming one part of our extended arm globally. Geopolitical risks, as I mentioned, it’s getting more and more evident that there is a strong push to make sure that the preparedness is taken care of globally. And there is also a push towards a demand for being more local when supporting governments, institutions in countries. And a good example of that is why we are then expanding with the service center into Saudi Arabia to that will support the GCC market, but this will be the first stepping stone in that sense.

And then also that when we are talking about environmental protection technology, it’s not only the oil spill response, but another adjacent market that’s very important is the water intake protection. When we are talking about large water intake for desalination purposes or energy production talking and especially then in the temperate regions around the world. And that’s where our technology, our services, our operational capabilities can deployed. And that’s where we now have several examples of that where we are supporting then the Kingdom Of Saudi Arabia with their strategy around protecting water intakes, strategical water intakes around the coastal area, both on the Red Sea side and then also on the Arabian Gulf side. Some of the key strategic milestones then.

As I mentioned, Middle East strengthened and that’s then the increasing ever increasing installed base in that area and then the requirement also to be more localized. That then will be supported by service center in Saudi Arabia. Then the progress with the agent network that is now starting to bear fruits also in respect to Africa, where this is an example from the one of the annual Africa Business Partner conferences that we are arranging. So managing, supporting the agents and making sure that they can be equipped to support us in their work. Then also several strategic wins in the soil remediation area, the first remediation project in Europe.

And Europe, especially that we can show that we are close to the market also in Europe with our soil remediation expertise And that can be drawn upon in situations where that will be needed in much larger scale. And with the salt remediation part, I would say that we are becoming now a recognized player in that market with the references that we have, world scale type of references like Kuwait and also in the Amazonas and Andes where we’ve been doing this for years. So we are a recognized player. And that means that we are also participating in pre feasibility studies, so scoping the work before it’s being tendered. And that’s an important part also in respect to executing our strategy.

Then I’m very happy also to announce that we are very close to the opening ceremony for the Marpol treatment center in Bangladesh. That is now one of the landmark references in respect to Marpol treatment facilities. And that is combined then with oil spill response, so a complete offering around that. So a great reference in that sense that has allowed us then to participate in pre designing pre feasibility study for MARPOL projects in other parts of Middle East. And this is something that we know is continuing and that we will push hard for.

So this is again a good example of a strategic partnership with Greenflow in this case that we are teaming up with to build this complete service for a large port that is then making sure that they can live up to the MARPOL certification requirements for the ports. Preparations continue in Kilpillati. The overall installation work has progressed very well. And for the full infrastructure, we are talking about gas handling. We are talking about ash handling, we are talking about oil handling and our infrastructure for that in Kilpillati and the whole complete building that is progressing very well.

And also that the process equipment for the oil processing where we have, let’s say, where we are now doing the testing together with the technology supplier, and we will provide an updated estimate in respect to the start of the production and the finalization of the commissioning work later on in during the following quarter. Progress in Kuwait. I would say that the activities in Kuwait is progressing as planned. And that is then not much more to say about that, that it’s continuing as planned. Other solar remediation projects are continuing in South America, in Ecuador and Oman.

So Nalle, Jor, to talk through the financial update, please.

Nalla Stehmann, CFO, Landmark: Thank you, Johan. Good morning, everybody, to our quarter two results. I will start by talking a little bit about our revenue and our profitability. As you all can see on the screen, second quarter revenue was €21,100,000 a little bit more than in last quarter. So that means we made in the first half €40,200,000 which is slightly below or below last year’s same period.

However, our adjusted EBIT is for the first quarter was two point eight million nine one million euros our second quarter was €1,000,000 So cumulatively, are EUR 2,800,000.0 in adjusted EBIT, which is above last year same period. And the margins are for the first half year, 6.9%. And of course, our this quarter, our profitability was a little bit lower in percentage wise. In first quarter, we had a couple of very, very good margin deliveries. Now the margins were good, but not exceptional.

So that’s why a little bit lower on the quarter two. But on big picture, I would say that it is our low turnover or revenue that still affects our profitability because of our cost base, which is quite fixed anyway still. Then we jump to the revenue split, where we look at first on the left hand side, you have the product portfolio, which is clearly has gone towards the these quarters now. This is the first half of the year, so have gone towards environmental protection and equipment deliveries. Our remediation and restoration business is a smaller portion.

We have not got in the beginning of the year or in the last year new business yet in that part. So it has lost a little bit of ground. And our recycling business is mainly the at the moment, the Bangladesh, which Johan was just mentioning about where we are just finalizing all the works and our Kilpilhatti new operation has not yet to be started. That’s why our recycling is relatively low. For the equipment and services, just as was discussed, our equipment business in environmental protection has been growing.

Therefore, the part of the equipment has been growing. In areas, we have a nice now a quite nice split. Hopefully, that will remain, but it will grow so that the €40,200,000 would be higher, but the split is nice. At least we have three legs, quite even legs to stand on. Why MEF or Middle East And Africa has dropped this because of the service agreements, and we mainly have one big Kuwait there, whereas in Eurasia and Americas, we have had quite nice successes in equipment and in a couple of oil spills that happened in South America, which was in the first quarter quite dominant in turnover.

For the order intake, we are happy, of course, with the 49 increase in our second quarter orders, and we have reached more than €20,000,000 in orders in the second quarter. And in full year half a year figures, we were up even 61% to almost €20,000,000 Now of course, these are great numbers in growth, but of course, our expectation is for the future to be on a different level. And especially in orders during the Q3 and Q4, we expect to be to we strive for a much better figure. For the order backlog, it was about SEK 86,000,000 in the end of Q2, out of which approximately SEK 50,000,000 is expected to be able to be delivered still this year and taken into revenue. For the working capital and cash flow, so on the left hand side here, you will see quite a nice move from down 34.

And that is, of course, a big chunk of that comes already during Q4 last year when there was a great job done by the company reducing the working capital and releasing cash to the operations. Now during Q1 and Q2, we have been able to keep the level and even improving still a bit. So that is great. We were able to on the right hand side, you see the net cash flow from operations. So in this quarter, we were able to release some cash from our operations, which is great.

However, on cumulative for the year, we’re still a little bit behind. And here, of course, The Middle East and Asia, especially for the big jump from the Q4 or Q3 to today’s situation, Kuwait and Middle East is a big explanation. The equity ratio is still relatively good, 36.2%. Gearing have gone up, however, to 91% during this period. And then if you look at the investment we have done, mainly this has to do with Gilpinati, of course.

And on the second quarter, we did SEK 4,000,000. And on full half year, it is close to SEK 10,000,000 now. So that is basically our financial figures in a nutshell for this one. Of course, you have a much more information in the package that was sent out earlier. And that I think is Johan Stern.

Johan, CEO, Landmark: Thank you. So the outlook and key focuses for H2. First of all, the guidance for the remaining or for the full year remains, as you can see on the dark books that will not be will be unchanged. Something about the assumptions then. The guidance is based on the existing backlog order backlog, the known tenders that we have and then offer submitted and, of course, the management’s view on the market demand and the customer decision time line.

We are in the, let’s say, stage of negotiating several significant equipment and medium sized service contracts. But as I said that the timing respect to decision is something that is more blurry than that is, I mean, a result of the geopolitical situation. The let’s say, the revenue expected to be below comparison during the comparison period during the third quarter and exceed clearly then during the final quarter. And this means that there is a strong focus on making sure that the accumulation of new orders in the third quarter will be realized. So that is basically the assumptions that we are basing our maintained guidance on.

Then when talking about the opportunities and what is in our sales funnel, as I said that the market and the demand for our services is there. That has not been changed. But then the decision making point is something that we need to focus on and also that we that in some sense is not is out of our reach in respect to how we can work on it. I’m very happy with the equipment sales and small service projects. That now is something that we’ve been focusing on and making sure that our sales forces are focusing on closing deals and also that this is something that we can speed up in that sense.

The medium sized service projects and large projects, that’s the negotiations and that’s something that we are a little bit more unclear in the decision timing regarding those cases. But our full funnel is something that we are very proud of and that is continuously growing and we are getting a better grip on it the whole time. And that’s part of the strategic work that we are also focusing on. Then to support the strategy, we have also decided to accelerate the efficiency initiatives throughout the company, making sure that we are as we’ve said that we will focus on certain areas. We will also make sure that our global sales force will be much more, let’s say, aligned and then taking into account also our agents and distributors in making sure that we are globally present.

But in respect to the larger cases, we are focusing on the focus areas that we highlighted in the strategy. But this is something that we will accelerate. We will look at our fixed costs and also the operational efficiency across the company. And we will come back to more details as we go along and tell you more about the achievements from this part. What we are targeting is 8,000,000 in annualized savings by 2026 compared to ’24 level.

H2, sales and delivery, making sure that revenue recognition will be efficient. And this is something that we are pushing in our bridgehead markets in The Middle East, Africa and South America, especially. Then this is then, of course, to secure the order intake in Q3, Q4 and then the revenue recognition as a result. And this will then what we’ve initialized here is that we put in place is also that we are looking at the deliveries and how to make sure that there are no stumbling blocks in making sure that the deliveries are happening at right time and the right quality. Focusing on the efficiency initiatives and then also the cash flow.

That will continue. That is something that we have been very successful in respect to the focus on the cash flow and that is something that we will continue to do as normal business. Then in respect to the circular oil production preparations, this is continuing and we will come back to an update regarding the startup of the production in the near future. So this is the focuses for H2 twenty twenty five. Thank you.

Tapio Besseland, Moderator/Host, Landmark: Okay. Thank you, Johan, and thank you, Nalle also. Now we are ready to start the Q and A part of the session. And we have a couple of questions here already waiting for us and you’re free to send more as we go along. So the first question, let’s take it from Thomas Westerholm, the analyst from Inderes.

So let’s start with the question about Kyiv Pilate actually, the concept plant. So about the construction and what is the reason behind the announced delay in the testing and installation? And also does this affect the cost level or what is our view on that?

Johan, CEO, Landmark: We will come back to more details about that. But for sure this is in respect to the testing of process equipment. This is let’s say, in that sense not a this is a new technology and the testing part has taken longer than what we expected. And this is something that now will push us a little bit further ahead. But we will come back to the more clear timing point in respect to the startup of the oil production.

Tapio Besseland, Moderator/Host, Landmark: Yes. And then any comment? There was also the other question about the potential cost impacts. Do we have a view on that at the moment or yet? I think that this is also something that we need to

Johan, CEO, Landmark: come back to in that point. Of course, that a certain delay will have a cost impact, what is the level of it that is something.

Tapio Besseland, Moderator/Host, Landmark: Will clarify. Yes. As we go along. Okay. Then another question on the efficiency initiatives you now discussed also in your presentation.

So the potential impact on our business and capabilities. So Thomas is asking, as you aim for €8,000,000 in savings, will this affect LAMO’s sales capabilities or potential revenue capacity?

Johan, CEO, Landmark: I would say that this has a wide impact on the company overall. But we will look through the cost base in especially throughout the company and also making sure that the focus is in the strategy is supported well going forward. And that it’s part of the strategy and implementation process. I don’t know if you want

Nalla Stehmann, CFO, Landmark: No, that sounds okay.

Tapio Besseland, Moderator/Host, Landmark: Yes. And as mentioned, we will get back to the initiatives and activities later on as they proceed. Then a question a final question actually about financing. So maybe this is for Nala. So Thomas is asking how much was your senior debt to EBITDA in Q2?

And is this still in line with the covenants that we have?

Nalla Stehmann, CFO, Landmark: Yes. So basically, we did not do as well as we had hoped in the result, even though we did better than last year. So we came quite close to the covenants. So we were 3.4 and plus and the covenant is 3.5%. So we are quite close to it.

So in that respect, we did not break any covenants. Everything is fine, but we hope to improve it and not to come so close next time.

Tapio Besseland, Moderator/Host, Landmark: Definitely. Okay. Actually, at the moment, those are the questions we have. So I think that everything is then fairly clear. So we look forward to talking to you again.

And thank you for joining us today.

Johan, CEO, Landmark: Thank you.

Nalla Stehmann, CFO, Landmark: Thank you.

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