Caverion Corporation Interim Report 3 November 2022 at 8.30 a.m. EET
HELSINKI, Nov. 3, 2022 /PRNewswire/ —
Strong quarter with continued organic growth and improved profitability
1 July – 30 September 2022
Revenue: EUR 564.1 (493.7) million, up by 14.3 (-4.2) percent. Organic growth was 11.8 (-4.6) percent. Services business revenue increased by 15.5 (-0.1) percent. Projects business revenue increased by 11.9 (-11.2) percent.
Adjusted EBITA: EUR 26.9 (21.5) million, or 4.8 (4.4) percent of revenue, up by 25.0 percent.
EBITA: EUR 25.1 (17.7) million, or 4.5 (3.6) percent of revenue, up by 42.2 percent.
Operating profit: EUR 21.1 (13.5) million, or 3.7 (2.7) percent of revenue, up by 55.8 percent.
Operating cash flow before financial and tax items: EUR 7.7 (-10.1) million.
Earnings per share, undiluted: EUR 0.10 (0.05) per share.
Acquisitions: Caverion closed four acquisitions in July–September 2022, total annual revenue EUR 53.2 million.
1 January – 30 September 2022
Recommended public tender offer for all Caverion shares
Order backlog: EUR 1,971.0 (1,889.7) million, up by 4.3 (16.1) percent. Services backlog increased by 9.0 (15.2) percent. Projects backlog decreased by 1.3 (+17.2) percent.
Revenue: EUR 1,669.2 (1,554.1) million, up by 7.4 (-1.4) percent. Organic growth was 6.2 (-2.3) percent. Services business revenue increased by 9.1 (2.6) percent. Projects business revenue increased by 4.3 (-8.1) percent.
Adjusted EBITA: EUR 67.2 (57.6) million, or 4.0 (3.7) percent of revenue, up by 16.6 percent.
EBITA: EUR 61.5 (50.8) million, or 3.7 (3.3) percent of revenue, up by 21.1 percent.
Operating profit: EUR 49.9 (38.4) million, or 3.0 (2.5) percent of revenue, up by 30.0 percent.
Operating cash flow before financial and tax items: EUR 37.4 (27.1) million, up by 37.9 percent.
Cash conversion (LTM): 90.1 (96.4) percent.
Earnings per share, undiluted: EUR 0.23 (0.16) per share.
Net debt/Adjusted EBITDA: 1.8x (1.4x).
Acquisitions: Caverion closed nine acquisitions in January–September 2022, total annual revenue EUR 92.3 million.
Unless otherwise noted, the figures in brackets refer to the corresponding period in the previous year.
Guidance for 2022: In 2022, Caverion Group’s revenue (2021: EUR 2,139.5 million) and adjusted EBITA (2021: EUR 87.7 million) will grow compared to 2021.
KEY FIGURES
Jacob Götzsche, President and CEO:
“I am pleased that we continued our positive development in the third quarter of 2022. We delivered a double-digit organic revenue growth both in Services and Projects. Partially the growth was driven by the increased costs of materials and external services, that we were able to successfully factor in our sales prices. We estimate this inflation impact to account for roughly one third of the organic growth. In addition, our profitability and cash flow improved. We expect our solid order backlog to support revenue growth also going forward.
The high cost inflation continued to impact the building technology market in the third quarter. We have proactively taken various measures to manage pricing, including price increase clauses in tenders and agreements. The market instability is expected to decrease new construction volumes going forward. However, our Services business accounts for around two thirds of the Group revenue and is overall more resilient throughout business cycles.
The effects of the corona pandemic stabilised during the third quarter, however the sick leave levels were still above normal. We remain somewhat cautious with the pandemic as unpredictable virus variants and new waves of the pandemic may continue to emerge.
Despite all the challenges posed by the operating environment, our order backlog continued to increase during the third quarter, and amounted to EUR 1,971.0 (1,889.7) million at the end of September, 4.3 percent higher compared to same time previous year. Our third quarter revenue increased by 14.3 percent to EUR 564.1 (493.7) million. The revenue increased in all divisions as a result of increased underlying activity and partly indirectly due to inflation impact.
We have been able to show resilience despite the cost inflation and higher sick leave levels and improved our adjusted EBITA by 25.0 percent to EUR 26.9 (21.5) million, or 4.8 (4.4) percent of revenue during the third quarter of 2022. Profitability improved in both Services and Projects. I am also pleased that in the current operating environment, we could improve our operating cash flow before financial and tax items significantly to EUR 7.7 (-10.1) million in the third quarter.
As part of the implementation of our Sustainable Growth strategy, we have made targeted acquisitions. In the first nine months of 2022, we closed nine acquisitions with total annual revenue of EUR 92.3 million and welcomed already more than 700 new colleagues from the acquired companies. The acquisition of PORREAL Group strengthens our position in the Austrian facility services market. The acquisition of CS electric expands our footprint in marine, energy and industrial segments in Denmark. After the review period, we also signed an agreement to acquire TM Voima group’s substation and transmission line business in Finland and Estonia. The acquisition strengthens our presence in the energy sector. Our third quarter revenue increased by 2.9 percent as a result of acquisitions and divestments. We continue to look for high quality companies that complement our existing capabilities or geographical footprint.
A consortium of investors led by Bain Capital has today on 3 November 2022 announced a public tender offer to the shareholders of Caverion. The Board of Directors of Caverion, represented by a quorum comprising the non-conflicted members of the Board of Directors, has unanimously decided to recommend that the shareholders of Caverion accept the tender offer. The offer provides clear evidence that our goal to achieve Sustainable Growth by delivering to our customers along the building’s lifecycle and assisting in their Smart Building and green transitions is an attractive strategy for the future. I believe that with the support and resources of the consortium we will be able to further accelerate our business and deliver for all our stakeholders. We at Caverion continue our daily work as usual, focusing on serving our customers and working together across the company.
Despite the lowered economic growth prospects, we are on a good track to improve profitability in line with our strategy. We have already before the ongoing energy crisis proactively strengthened our capabilities in energy efficiency enhancing services. We enable our customers to reduce their energy consumption, be more sustainable and reduce their carbon footprint. We strongly believe in our purpose to enable building performance and people’s wellbeing in smart and sustainable built environments.”
Impacts of the Ukraine crisis on Caverion’s business during the first nine months of 2022
Russia’s invasion of Ukraine at the end of February 2022 increased geopolitical tensions especially in Europe overnight. The war has created uncertainties weakening the growth prospects in several countries where Caverion operates. The duration of the Ukrainian conflict and its future effects on the industry, and Caverion in particular, remain uncertain, and the overall situation remains highly volatile.
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