Alfa Laval AB (ALFVF) Q3 2024 Earnings Call Highlights: Strong Cash Flow and Service Growth ...

• Book-to-Bill Ratio: 1.17 for the group.

• Service Growth: 11% in the quarter.

• Cash Flow: SEK3.75 billion in the quarter.

• Order Intake: SEK18.9 billion for Q3; year-to-date SEK56.1 billion.

• Revenue: SEK16.2 billion for Q3; year-to-date SEK48.6 billion.

• Gross Profit Margin: 36%, an increase of 2.8% from the previous year.

• Operating Income: SEK2.7 billion.

• Earnings Per Share (EPS): SEK4.77, an increase of 11%.

• Adjusted EBITDA Margin: 17.3%, 0.6% higher than the same period last year.

• Free Cash Flow: SEK3 billion.

• Debt Reduction: Decreased by SEK1.3 billion in Q3; SEK5 billion since Q3 last year.

• Warning! GuruFocus has detected 4 Warning Sign with ALFVF.

Release Date: October 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

• Alfa Laval AB (ALFVF) reported a strong quarter with elevated demand in the marine sector and a book-to-bill ratio of 1.17.

• Service growth continued at a high level of 11%, supported by strategic investments in infrastructure and personnel.

• The company achieved strong cash flow of SEK3.75 billion, indicating operational stability in the supply chain.

• Margins strengthened year-on-year and sequentially, driven by a positive mix and strong performance in several business units.

• The Energy division returned to order intake growth, with promising developments in clean energy applications like carbon capture.

• Project invoicing in the Energy division was lower than expected, contributing to some volatility between quarters.

• The European heat pump market remains weak, with no speedy recovery expected, impacting the brazed heat exchangers segment.

• The Food & Water division saw a decline in order intake compared to the previous year due to fewer large project orders.

• The US market showed unexpected weakness in order intake, particularly affecting the Food & Water division.

• The Marine division anticipates a moderation in order intake in Q4, following record levels in the tanker segment.

Q: Can you elaborate on the sustained high vessel contracting in the Marine segment, particularly in tankers? Is this specific to Q3, and how does it relate to orders from Q2? A: The high vessel contracting is not specific to Q3. We are in a period of increased demand for new ships, particularly tankers, due to positive freight rates across segments. The orders in Q3 are an effect of this demand, and while the entire contracting isn't in our order books yet, the cargo pumping segment is. We expect this elevated demand to continue, providing stability in invoicing over the next few years. - Tom Erixon, CEO