Sales in Q2 came in at € 434m (eNuW: € 424m, eCons: € 426m), up 1.2% yoy as sales from the Infrastructure segment grew by 7.5% yoy to € 156m (due to two acquisitions and improving demand), which compensated for weaker Materials Solutions (-3.6% yoy to € 142m) as a result of supply chain constraints, a smaller divestment and flattish yoy development of Engineering (-0.2% yoy to € 137m). Overall, the weak USD turned into another headwind. H1 sales were down 0.3% yoy (2.6% positive M&A effect).
Order intake uptick supports H2 improvements. The group's order intake increased by 16% yoy to € 446m (backlog at the end of Q2: +4.5% yoy to € 665m). Most noteworthy, Engineering recorded a 32% jump of incoming orders (H1: +25% yoy) while Infrastructure and Material Solutions both posted a decent gain for the quarter (10%, 7%) and a slight gain for H1 (1%, 2%).
Adj. EBITA stood at € 31.2m (eNuW: € 33.9m, eCons: € 35.6m), a 26% yoy decrease with a 7.2% margin (-2.7pp yoy) largely driven by the challenging supply chain situation in regards to rare earths (Materials Solutions margin -4pp yoy), a price pressure in the Infrastructure segment (-3.1pp yoy) and a group-wide FX headwind. H1 adj. EBITA was down 24% yoy at € 56.1m.
Q2 FCF of € 15.7m was down 55% yoy as a result of continued investments across the group's portfolio as well as higher working capital needs; H1 FCF stood at € -7.9m. During H2, FCF is seen to strongly increase carried by seasonal working capital dynamics and the expected rise of adj. EBITA putting the FY25 FCF guidance of more than € 90m in reach (eNuW: € 90m). Mind you, in FY24, Q4 accounted for more than half of FY FCF. During the earnings call, management highlighted a year-end net debt target of € 580-590m (H1: € 635m).
M&A engine running well. Year-to-date, INDUS acquired five companies (four in H1) across Engineering and Infrastructure also expanding its geographical footprint in the US and the Nordics. This is in line with its recently introduced "Empowering Mittelstand" strategy which includes a € 500m M&A war chest to be deployed until 2030.
FY25 guidance confirmed. Management continues to expect sales of € 1.7-1.85bn, adj. EBITA of € 130-165m and FCF of more than € 90m. In light of the H1 results and the required improvements that are partially backed by the order backlog/order momentum, we regard the guidance as reasonable.
BUY with an unchanged € 34 PT based on FCYF25e.
