Cerba - comment

Cerba reported Q3 2024 which showed progress in their turnaround. The company reported €439m revenue in Q3 2024, up by +0.2% which was slightly below our Q3 2024 estimates of €446m (which came from slightly lower than expected revenues from routine testing). EBITDA increased by 6.6% to €89.2 million due to cost synergies and better purchasing conditions though lower than our expectations at €98 million. Cash flow from operations from the quarter came in at €76 million which was close to our €77 million estimate. Free cash flow before debt service came in at €133 million which was slightly below our estimate at €136 million. Liquidity remained strong at €189 million. The company has also won a new €120 million contract in their research division with the book to bill ratio above 1 at the end of September 2024.   

The company continues to be run on a maintenance capex basis with management on the lookout for more non-core assets. The company expects a further unwind in working capital in Q4 which in line with our expectations. We will discuss the results in a more detailed model update after the call today at 2:00 pm. But the story seems to be moving in the direction of our positive thesis.