Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Arribatec Group ASA (OSL:ARR, Financial) signed a frame agreement with the Norwegian armed forces valued at NOK 19 million, with NOK 7.5 million already called upon.
- The company won a P implementation project for a Norwegian customer valued at approximately NOK 9 million.
- Recurring revenue reached an all-time high of NOK 63 million, accounting for 49% of total revenue, up from 41% a year ago.
- Norway's revenue contribution increased by 6% compared to the previous year, accounting for 67% of total revenue.
- The company has launched profitability improvement initiatives, including cost reductions and selling non-core assets, to align profitability with peers.
Negative Points
- Quarterly revenue decreased to NOK 130 million, down NOK 2 million from the same quarter last year.
- EBITDA was negative NOK 4 million, a reduction of NOK 14 million compared to the previous year.
- Cash position at the end of the quarter was NOK 18 million, significantly lower than the typical NOK 30 to NOK 40 million.
- The company is undergoing financial restructuring, including extending credit facilities and proposing a rights issue to raise NOK 35 million.
- Order intake for the quarter was down 22% compared to the previous year, with a notable decrease in the Hospitality segment.
Q & A Highlights
Q: Can you provide an overview of Arribatec Group ASA's financial performance for Q3 2024?
A: The quarterly revenue for Q3 2024 was NOK 130 million, which is NOK 2 million lower than the same quarter in 2023. The EBITDA was negative NOK 4 million, a reduction of NOK 14 million compared to a year ago. The cash position at the end of the quarter was NOK 18 million, down from the typical range of NOK 30 to NOK 40 million.
Q: What are the key strategic initiatives Arribatec Group ASA is undertaking to improve financial performance?
A: Arribatec Group ASA announced a financial restructuring plan, including an agreement with DNB to extend a NOK 20 million credit facility and an additional NOK 15 million facility. The board also proposes raising up to NOK 35 million through a rights issue. The company is launching profitability improvement initiatives, including cost reductions and selling non-core assets, with a focus on improving margins rather than growth.
Q: How is the recurring revenue performing, and what is its significance to the company's overall revenue?
A: Recurring revenue reached an all-time high of NOK 63 million, up NOK 9 million from a year ago, now accounting for 49% of total revenue, compared to 41% a year ago. This increase highlights the growing importance of stable, recurring income streams for the company.
Q: What are the geographical revenue contributions for Arribatec Group ASA?
A: Norway contributed NOK 87 million, or 67% of total revenue, up 6% from a year ago. Continental Europe contributed NOK 21 million, accounting for 16% of total revenue, which is down 13% compared to the previous year. The UK and US also saw a decline, with revenues of NOK 21 million and NOK 26 million, respectively.
Q: What is the outlook for Arribatec Group ASA moving forward?
A: The focus will be on improving financial performance, reassessing the balance sheet, and winning new business. Cost reduction and efficiency improvement initiatives are expected to lift margins during 2025. There is robust demand for services in cloud, EA BPM, and business services, which will aid in margin improvement efforts.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
