Release Date: August 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ambea AB (FRA:6MA, Financial) reported a significant increase in EBITDA, up 42% year-over-year, with an improved EBITDA margin of 7.7% compared to 5.8% in the same quarter last year.
- The company has a strong financial position with high free cash flow generation, which increased by 24% this quarter.
- Ambea AB (FRA:6MA) successfully completed share buyback programs, repurchasing 3 million shares for SEK187 million and initiating a new program for another 3 million shares.
- The company has shown positive organic growth, with a total organic growth rate of 5.9% for the quarter.
- Ambea AB (FRA:6MA) continues to expand its pipeline, with 1,272 beds or care places in development, most of them in Sweden, indicating strong future growth potential.
Negative Points
- Altiden, one of Ambea AB (FRA:6MA)'s business areas, reported a 5% decrease in revenue, primarily due to the expiration of a large elderly care contract.
- Klara, another business segment, experienced a 10% decline in revenue due to continued lower demand for staffing solutions.
- Nytida's EBITDA decreased by SEK10 million, or 1.3 percentage points, due to lower occupancy in some parts of the Individual & Family Care segment.
- The company faces challenges in the labor market, particularly in finding qualified staff for new units, which could impact future growth and operational efficiency.
- Ambea AB (FRA:6MA) has five elderly care units with no active operations, which could be a drag on profitability if not resolved.
Q & A Highlights
Highlights of Ambea AB (FRA:6MA) Q2 2024 Earnings Call
Q: How confident are you in your guidance around breakeven for Altiden, given the labor challenges and occupancy issues?
A: Our aim and target is still that Altiden should breakeven this year. However, we need some tailwind in lowering sick leaves and increasing occupancy levels in the second half of the year to reach that target. But it's still our ambition. (Mark Jensen, CEO)
Q: Could you elaborate on the top line for Nytida, which seems to have slowed down a bit organically?
A: There is a natural fluctuation in demand in individual and family care, especially for children and youth. We don't see this as a continuing trend and expect better net sales growth in the coming quarters due to more openings and an increasing contract management portfolio. (Benno Eliasson, CFO)
Q: What is your visibility for Q3 and Q4 regarding the favorable demand for complex youth care in Stendi?
A: The Norwegian society continues to face a high need for children and youth care, especially with complex issues. We expect the current high demand to continue for the next couple of quarters. (Mark Jensen, CEO)
Q: What is the outlook for Vardaga, given its strong results and 8.6% margin on a rolling basis?
A: We have made significant progress in operational and management improvements in Vardaga. We believe there is still room for occupancy gains and operational improvements, potentially gaining another percentage point in margin. (Benno Eliasson, CFO)
Q: How much of the sequential increase in Stendi's top line is driven by short-term placements versus longer-term placements?
A: Most of the growth in revenue comes from the children and youth segment, but there is also growth in other segments. The strongest contributor is children and youth care. (Mark Jensen, CEO)
Q: Is it easier to fill capacity in Vardaga now compared to earlier?
A: It depends on the local demand and supply situation in each municipality. In Stockholm and Upsala, where we have freedom of choice, there seems to be good demand, and the new units have gotten off to a good start. (Benno Eliasson, CFO)
Q: How many elderly care units do you have with no active operations, and what is the outlook for those?
A: We have five units with no active operations and are working to see when and how we can open them or use them for other purposes. We solved two contracts last quarter, so now it's five units. (Mark Jensen, CEO)
Q: How much of Nytida's lower margin is due to one-off items versus lower occupancy in social care?
A: The margin decrease is due to lower occupancy in some parts of the Individual & Family Care segment and some one-off items. We believe the rolling 12-month margin of 13.3% is sustainable. (Benno Eliasson, CFO)
Q: What are the updated views on the supply needs in the elderly care space in the Nordic countries over the next 3-5 years?
A: In Sweden, around 400 new nursing homes are needed by 2031, but current construction pace is insufficient. In Denmark, around 200 new nursing homes are needed, and new legislation is expected to open all municipalities to private operators. In Norway, the demographic need is similar, but there is less political will to use private alternatives. (Mark Jensen, CEO)
Q: How has exiting the elderly care segment in Norway impacted margins?
A: Exiting the elderly care segment in Norway has contributed to margin improvement, but the main driver has been operational improvements and strong demand in other segments. (Mark Jensen, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
