Ekinops H1 2024 results: EBITDA margin of 14.3%
PARIS, July 29, 2024 /PRNewswire/ -- EKINOPS (Euronext Paris – FR0011466069 – EKI), a leading supplier of telecommunications solutions for telecom operators and enterprises, reports its H1 2024 financial statements (for the period ended 30 June 2024) as approved by the Board of Directors on 29 July 2024. The statutory auditors conducted an interim review of these half-year financial statements.
m€ – IFRS | H1 2023 (6 months) | H2 2023 (6 months) | H1 2024 (6 months) | 2023 (12 months) | |
Revenue | 71.0 | 58.1 | 57.5 | 129.1 | |
Gross margin | 37.7 | 29.6 | 32.2 | 67.3 | |
As a % | 53.1 % | 50.9 % | 56.1 % | 52.1 % | |
Operating expenses | 31.0 | 31.3 | 29.3 | 62.3 | |
EBITDA1 | 14.3 | 4.3 | 8.2 | 18.6 | |
As a % | 20.2 % | 7.4 % | 14.3 % | 14.4 % | |
Current operating income (EBIT) | 6.7 | -1.6 | 3.0 | 5.1 | |
Operating income | 6.6 | -3.0 | 2.6 | 3.6 | |
Consolidated net income | 6.0 | -2.4 | 1.5 | 3.6 | |
As a % | 8.4 % | n.a. | 2.6 % | 2.8 % |
1 EBITDA (Earnings before interest, taxes, depreciation and amortization) corresponds to current operating income restated for (i) amortization, depreciation and provisions, and (ii) income and expenses relating to share-based payments.
H1 2024 revenue: 57.5m€
Ekinops recorded H1 2024 consolidated revenue of 57.5m€, down -19% from the same period last year (identical at constant exchange rates).
Propelled by the sales rebound in France (+16% in H1 2024), the Access business line grew +1% over the period, after a decline over 2023. The Group's main operator-customers are gradually rebuilding their Access equipment inventory, without reaching normative levels.
Conversely, sales of Optical Transport solutions were down -41% in H1 2024, after an all-time high performance in 2023 (+41% in H1 2023 and +27% on a full-year basis). This business line was mainly impacted by (i) reluctance from operators with substantial inventory to initiate CAPEX (capital expenditure), (ii) slower growth for 2023 internet traffic in a context of overcapacity and (iii) a wait-and-see attitude triggered by the delayed launch of Ekinops' new 800G optical solution.
Software & Services accounted for 17% of Group revenue, with an increasing share of recurring revenue, particularly for the SD-WAN solution.
Geographically, H1 2024 revenue increased by +5% in France while international business declined by -31%. International sales for this first half came out to 56% (vs. 66% a year earlier), of which 22% in North America (down -31%), 32% in EMEA (Europe, Middle East and Africa, down -32%) and 2% in Asia-Pacific (decline of -15%).
H1 2024 gross margin: 56.1%
At mid-year, gross margin stood at 32.2m€, versus 37.7m€ Y-o-Y.
Gross margin thus reached a record level of 56.1% in H1 2024, vs. 53.1% a year earlier and 52.1% end-2023.
This record gross margin performance results from a favorable business mix (growth in the Access business line), a solid "selling price/manufacturing costs" ratio for Ekinops' solutions, and the increasing share of Software & Services' in Group's revenue.
H1 2024 EBITDA margin[1]: 14.3%
At mid-year, EBITDA came to 8.2m€ vs. 14.3m€ Y-o-Y, with a -6% decline in operating expenses, driven by carefully managed costs (-11% in general costs, -6% in R&D costs and -3% in marketing and sales costs).
As such, H1 2024 EBITDA margin was 14.3%, compared to an exceptional 20.2% a year earlier and 14.4% in FY 2023.
After accounting for net depreciation, amortization and provisions (4.1m€, including 1.1m€
of amortization relating to post purchase price allocation technologies), declining due to the discontinued amortization of OneAccess technology, and non-cash expenses relating to share-based payments (0.6m€), current operating income came to 3.0m€ in H1 2024 vs. 6.7m€ a year earlier.
Current operating margin therefore stood at 5.1% of half-year revenue, vs. 9.4% the same period last year and 3.9% in FY 2023.
H1 2024 adjusted EBIT: 7.0%
Excluding amortization of intangible assets identified post purchase price allocation, adjusted current operating margin (adjusted EBIT[2]) came to 7.0%, vs. 14.0% a year earlier and 8.0% at end-2023.
Other operating expenses totaled 0.4m€, resulting in operating income of 2.6m€ for H1 2024 vs. 6.6m€ Y-o-Y and 3.6m€ for FY 2023.
After taking into account financial expenses of 0.7m€, comprising a net interest expense and foreign exchange gains on currency hedging, and a tax expense of 0.4m€, H1 2024 net income stood at 1.5m€, vs. 6.0m€ a year earlier and 3.6m€ in FY 2023
H1 2024 operating cash flow: 5.1m€
Despite the economic challenges impacting its business, Ekinops showed once again resilience with an ability to generate cash through its operations.
At mid-year, operating cash flow totaled 5.1m€, up significantly compared with H1 2023 (+0.9m€). Change in working capital requirements was limited to €2.1m, down considerably from the previous year (13.1m€ in H1 2023, boosted by the sharp increase in accounts receivable). H1 2024 decrease in accounts receivable (-3.4m€) notably offset rising inventory (3.3m€) as a result of slower business activity.
Cash flow from investments (non-current assets and R&D) amounted to -5.7m€ (vs. -4.5m€ a year earlier), with 1.1m€ in equipment investments and 4.5m€ for capitalized R&D and the acquisition of the 5View software suite.
Cash flow from financing activities totaled -4.7m€, including -2.5m€ in repayments under bank loans. No new loans were taken out during the semester.
At the end of H1 2024, change in cash flow was -€5.4m.
Comfortable net cash[3] position of €22.3m as of June 30, 2024
ASSETS – €m | 12/31 2023 | 6/30 2024 | LIABILITIES – €m | 12/31 2023 | 6/30 2024 | |
Non-current assets | 78.8 | 85.4 | Shareholders' equity | 119.4 | 120.4 | |
o/w goodwill | 28.5 | 28.4 | Financial borrowings | 21.4 | 19.5 | |
o/w intangible assets | 17.1 | 18.5 | o/w bank loans | 18.3 | 16.7 | |
o/w right-of-use assets | 6.7 | 12.4 | o/w factoring | 2.8 | 2.5 | |
Current assets | 66.6 | 68.9 | French research tax credit pre-financing | 5.1 | 4.3 | |
o/w inventories | 25.9 | 29.2 | Trade payables | 18.2 | 17.1 | |
o/w trade receivables | 30.0 | 26.6 | Lease liabilities | 7.0 | 12.9 | |
Cash | 47.2 | 41.8 | Other liabilities | 21.5 | 21.8 | |
TOTAL | 192.6 | 196.0 | TOTAL | 192.6 | 196.0 |
During the first half of 2024, Ekinops signed the lease for its new headquarters in Lannion (Brittany) as well as renewing its Belgian subsidiary's commercial lease. This increased the Group's right-of-use assets to 12.4m€.
Cash and cash equivalents totaled 41.8m€ as of 30 June 2024, for financial borrowings[4] of 19.5m€.
As such, Ekinops benefited from a healthy financial position at the end of H1 2024, with net cash at 22.3m€ (vs. 20.3m€ a year earlier and 25.8m€ at end-2023) with shareholders' equity of 120.4m€ (vs. 119.4m€ as of 31 December 2023).
Subsequent to the semester, Ekinops secured a 1.8m€ subsidy, granted by the French government and Bpifrance as part of the "ORANGE MECT PART" major project of common European interest (PIIEC) initiative. The latter was developed in collaboration with Orange and its partners, to provide innovative connectivity solutions for specific configurations or digital deserts, as an alternative to current transmission solutions.
Outlook
Against a sluggish economic backdrop, Ekinops proved resilient thanks to a strong gross margin, sound management of operating expenses and a further demonstrated ability to generate cash flow despite the slowdown in business.
In Access, the gradual normalization of operator inventories in France led Ekinops to report modest growth for this segment over the semester. Looking ahead to H2 2024, the Group aims to accelerate this trend, both in France and EMEA, conditional on a favorable economic recovery. In Optical Transport, the launch of the 800G solution with its innovative features and the cost-optimized 100G product should spark fresh momentum in this business line over the coming semesters.
In this context, Ekinops expects Q3 2024 revenue to follow the same trend as previous quarters, with a more marked improvement in business targeted for Q4 2024.
In terms of external growth, Ekinops still aims to carry out operations to consolidate the Group, strengthen its offering and expand its customer base, favoring a non-dilutive source of financing.
See 2024 financial calendar here.
All press releases are published after Euronext Paris market close.
EKINOPS Contact
Didier Brédy, Chairman and CEO
contact@ekinops.com
Investors
Mathieu Omnes, Investor relation
Tel.: +33 (0)1 53 67 36 92
momnes@actus.fr
Press
Amaury Dugast, Press relation
Tel.: +33 (0)1 53 67 36 74
adugast@actus.fr
[1] EBITDA (Earnings before interest, taxes, depreciation and amortization) corresponds to current operating income restated for (i) amortization, depreciation and provisions, and (ii) income and expenses relating to share-based payments.
[2] Adjusted EBIT corresponds to current operating income adjusted for amortization of intangible assets identified after allocation of goodwill, Technologies developed and Customer relations.
[3] Net cash = cash and cash equivalents – borrowings (excluding bank debt relating to French research tax credit (CIR) pre-financing and IFRS 16 lease liabilities)
[4] excluding bank debt relating to French research tax credit (CIR) pre-financing and IFRS 16 lease liabilities
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SOURCE Ekinops
