Pfleiderer - comment

Based on the FY 2023 numbers, the company reported sales of EUR 939 million (vs. our estimates of EUR 1 billion) and a decline of 19%. However, reported EBITDA for 2023 beat our estimates of EUR 120 million at EUR 141 million at a 15% EBITDA margin. The company stated price pass-through, cost savings and gains in electricity trading for the EBITDA outperformance. The key negative was capex remained elevated at EUR 65 million and above our capex assumptions of EUR 35 million as the company is investing in capacity additions which is expected to continue into 2024. We had expected the company to run the business on a maintenance capex basis (especially in a downturn).  

The company also reported Q1 2024 financials with net sales of EUR 210 million (below our projections of EUR 225 million) and EBITDA of EUR 19.1 million (below our EBITDA projections of EUR 40 million) with a 9% EBITDA margin. Net leverage worsened to 4.8x from FY 2023. Liquidity remained strong at EUR 110 million. 

We remain constructive post the results as the company demonstrated resiliency, continues to cut costs and gave a sunny outlook on demand for H2 2024 / Q1 2025 which is also when we suspect the company will announce a refinancing of the existing notes. 

Existing holders suspected such and asked the management four times during the call yesterday regarding this which the company refused to comment on. Still the senior secured notes at the current trading levels represent more upside than downside for new investors.