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Star7
Earnings Release • Sep 27, 2024
4175_10-q_2024-09-27_16f14d64-d3ec-457e-9bd9-0439b1a713da.pdf
Earnings Release
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PRESS RELEASE
STAR7: BOARD OF DIRECTORS APPROVES CONSOLIDATED HALF-YEARLY REPORT AS AT 30 JUNE 2024
SIGNIFICANT IMPROVEMENT IN ALL FINANCIAL PERFORMANCE INDICATORS
Significant growth in revenues driven by foreign countries (USA and Brazil) Rationalisation process and integration of CAAR completed
Revenues: €60.4 million (+18.7% compared to €50.9 million in the first half of 2023) Adjusted EBITDA*: €9.2 million (+22.6% compared to €7.5 million in the first half of 2023) Adjusted EBITDA Margin*: 15.2% (+50 basis points compared to 14.7% in the first half of 2023)
Profit for the period: €1.5 million (+51.5% compared to € 1 million in the first half of 2023)
Net financial position: debt of €29.8 million as at 30 June 2024 (-€8 million compared to debt of €37.8 million as at 31 December 2023)
* Adjustments mainly relate to restructuring and integration costs of the CAAR Group business unit
Valle San Bartolomeo (Alessandria, Italy), 27 September 2024 – The Board of Directors of STAR7 (EGM ticker: STAR7) met today under the chairmanship of Lorenzo Mondo to examine and approve the Consolidated Half-yearly Report as at 30 June 2024. STAR7 is a company that provides an integrated range of product-information services, from product and process engineering support to the creation and management of technical and marketing content, translation, printing and virtual experience. The financial statements were prepared in accordance with the Euronext Growth Milan Issuers Regulation and in compliance with Italian accounting standards.
Lorenzo Mondo, Chairman and CEO of STAR7, commented: "The results for the first half of 2024, characterised by a significant growth in revenues and an improvement in operating margins, - dynamics accompanied by a substantial reduction in net debt,- demonstrate the validity of our strategies and the effectiveness of the business model. The drive for increasing internationalisation has enabled us to take advantage of the strong rise in revenues from our activities in the US and Brazil. Leveraging on the balanced diversification of the different service lines, we were also able to benefit from increased revenue from new
projects in Engineering and Product Knowledge. Lastly, the well-calibrated exposure to the different end sectors in which our clients operate, coupled with numerous multi-year contracts in our order portfolio, has made our performance resilient and counter-cyclical – which is particularly welcome in the first half of 2024, during an economic phase dominated by some uncertainty in businesses such as luxury, automotive and agriculture."
Lorenzo Mondo continued: "In addition to the completion of the integration of CAAR and greater utilisation of the offshoring facility in Albania, during the first part of the year our focus has been very much on optimising working capital, with visible results in terms of deleveraging, as shown by the Debt/EBITDA ratio falling from 2.6 times at the end of 2023 to 1.8 times at the end of June 2024.
"During this period, our efforts are geared towards creating a Group with a structurally sound base, which can fully capture the efficiencies resulting from the cost rationalisation implemented and which is capable of supporting a new phase of accelerated growth. Thanks to the opportunities offered by Generative Artificial Intelligence, we will have attractive scope for development in front of us, through the new solutions we will be able to offer our customers, particularly in the areas of Product Knowledge, Global Content, and Experience. We are not only confident, but also committed to embracing this outlook. A first step in the realisation of the 7AI project will therefore materialise soon, with the presentation in mid-October of a new portfolio of solutions at an event dedicated to our main customers."
* * *
FINANCIAL RESULTS
Revenues
STAR7 Group revenues amounted to €60.4 million in the first half of 2024, an increase of 18.7% compared to €50.9 million in the first half of 2023. The key factor in the progress achieved in the first six months of 2024 can be identified in significant organic growth in the USA and Brazil, driven by the Product Knowledge and Engineering service lines.
The geographical distribution of Revenues for the first half of 2024 (with a weight of the international market equal to approximately 49%, compared to approximately 43% in the first half of 2023) is testament to the success of the strategy for the increasing internationalisation of STAR7.
| Geographical breakdown of Group revenues |
1H23 | FY23 | 1H2024 |
|---|---|---|---|
| ITALY | 57.2% | 53.2% | 51.2% |
| USA | 21.6% | 22.8% | 24.5% |
| BRAZIL | 14.1% | 17.1% | 18.1% |
| OTHER | 7.2% | 6.9% | 6.2% |
STAR7 has also confirmed its ability to activate all available organic growth levers, through the continuous acquisition of new customers and an effective cross-selling and upselling process in the services offered to existing customers.
| Service Lines as a % of Group Revenues |
1H23 | FY23 | 1H24 |
|---|---|---|---|
| Global Content | 35.9% | 35.9% | 34.1% |
| Experience and Product Knowledge |
29.0% | 29.0% | 34.1% |
| Printing | 16.7% | 15.5% | 11.3% |
| set up | 18.4% | 19.6% | 20.5% |
EBITDA
In the first half of 2024, the EBITDA of the STAR7 Group amounted to €8.6 million, while Adjusted EBITDA (adjusted for integration and restructuring costs mainly related to the CAAR Group business unit) reached €9.2 million. The EBITDA Margin stood at 14.2% while the Adjusted EBITDA Margin was 15.2%.
EBIT
The EBIT of the STAR7 Group amounted to €4.5 million, an increase of 45% compared to €3.1 million in the first half of 2023.
Profit for the period
The STAR7 Group reported a Net Profit of €1.5 million in the first half of 2024, an increase of about 50% compared to €1 million in the first half of 2023.
The results for the first half of 2024 were achieved thanks to a high-quality order book and efficiency initiatives to maximise the profitability of current orders.
The M&A transactions carried out to date have generated net goodwill of €28 million as at 30 June 2024, resulting in €2 million in amortisation. Gross of this amortisation, in line with the representation of the main international standards, the Net Profit for the first half of 2024 would have been €3.5 million.
Net financial position
The net financial position as at 30 June 2024 was a debt of €29.8 million (€37.8 million at 31 December 2023). This result confirms the effectiveness of the strategies implemented by management to improve working capital management and reflects the sales results achieved by the Group in the first half of 2024. Gross debt stood at €47.1 million (€47.3 million at 31/12/2023). The Net Debt/EBITDA ratio of 1.8 as at 30 June 2024 compares to a value of 2.6 as at 31 December 2023 and 2.2 as at 30 June 2023.
The Group's liquidity includes €4 million from a Credem loan linked to the acquisition of the C.A.A.R. S.p.A. and S.T.I. s.r.l. business units, scheduled for competitive auction on 22 October 2024.
***
STAR7 also continues to comply with the covenants of its outstanding bonds and loans.
OUTLOOK
The operating and financial results achieved in the first half of 2024, combined with the solid trend in sales activity, allow us to take a positive view of the second half of the year. The Group will also continue to increase its focus on cash generation and consequent debt reduction.
* * *
FILING OF DOCUMENTATION
A copy of the Consolidated Half-yearly Financial Report as at 30 June 2024, including the Independent Auditors' Report, will be made available to the public within the terms set out by law at the company's registered office in Valle San Bartolomeo (Alessandria, Italy), on the company's website www.star-7.com in the section "Investor Relations/Reports and financial statements", and on the authorised storage mechanism .
* * *
CONFERENCE CALL TO PRESENT H1 2024 RESULTS
The results for the first half of 2024 will be presented by STAR7's management today, Friday 27 September 2024, at 3 p.m. CEST, during a conference call.
The conference call can be joined by registering at the following URL:
https://events.teams.microsoft.com/event/cf4556b0-42d6-4fda-b032 c15945181725@1d88a220-5f5c-42a8-8081-4a67baa01fc4
The presentation will be available from the start of the conference call on the company website at:
https://www.star-7.com/en/investor-relations/presentations
This press release is available on the STAR7 website www.star-7.com (in the "Investor Relations/Press releases" section) and on the storage system for regulated information .
STAR7
For more than 20 years, STAR7 has served its customers as a leader in the product information sector. Support for product and process engineering, creating and managing technical content, as well as marketing, translation, printing and virtual experience: STAR7's range of services means it can assist its customers throughout the product life-cycle – from design to aftersales.
STAR7's hallmark has always been an approach combining specific know-how, technology and vision to offer the best possible solutions to the needs of customers and the global market. This approach has seen STAR7 strike major partnerships with leading international companies, establishing it as a reliable and credible global partner. STAR7 is part of the STAR Group network.
www.star-7.com.
FOR MORE INFORMATION:
INVESTOR RELATIONS
Pierluigi Valletta, CFO, M&A and Investor Relations Manager Tel: +39 0131 19788 Email: [email protected]
Blue Arrow - IR Advisor Maria Grazia Mantini
Mob: +41 78 723 6840 Email: [email protected]
MEDIA RELATIONS [email protected]
EURONEXT GROWTH ADVISOR ALANTRA Capital Markets Mob: +39 334 6267243 Email: [email protected]
ANNEXES INCOME STATEMENT
| 30/06/24 | 30/06/23 | Change | Change % | |
|---|---|---|---|---|
| Net revenues | 60,365,165 | 50,860,071 | 9,505,094 | 18.7% |
| Other revenues | 442,626 | 713,669 | -271,043 | -38.0% |
| Change in inventories and increases in fixed assets |
-231,836 | 51,929 | -283,765 | -546.4% |
| External costs | -25,626,279 | -23,172,895 | -2,453,384 | 10.6% |
| Added Value | 34,949,676 | 28,452,774 | 6,496,902 | 22.8% |
| Personnel costs | -26,360,238 | -21,520,769 | -4,839,469 | 22.5% |
| EBITDA | 8,589,438 | 6,932,005 | 1,657,433 | 23.9% |
| Depreciation, writedowns and other provisions |
-4,089,777 | -3,825,040 | -264,737 | 6.9% |
| EBIT | 4,499,662 | 3,106,965 | 1,392,697 | 44.8% |
| Net financial income | -1,632,337 | -1,193,797 | -438,540 | 36.7% |
| Profit before taxes | 2,867,325 | 1,913,167 | 954,157 | 49.9% |
| Income taxes | -1,368,761 | -923,891 | -444,870 | 48.2% |
| Net profit | 1,498,563 | 989,276 | 509,287 | 51.5% |
BALANCE SHEET
| 30/06/24 | 31/12/23 | Change | Change % | |
|---|---|---|---|---|
| Net intangible assets | 36,113,112 | 38,215,878 | -2,102,766 | -5.5% |
| Net tangible assets | 8,781,775 | 9,194,650 | -412,875 | -4.5% |
| Equity holdings and other financial investments | 536,273 | 277,808 | 258,465 | 93.0% |
| Fixed assets | 45,431,159 | 47,688,336 | -2,257,177 | -4.7% |
| Inventories | 2,554,312 | 2,541,276 | 13,036 | 0.5% |
| Trade receivables | 34,488,258 | 37,172,859 | -2,684,601 | -7.2% |
| Receivables from associates and related parties | 537,845 | 855,010 | -317,164 | -37.1% |
| Other receivables | 7,719,190 | 6,149,817 | 1,569,373 | 25.5% |
| Accruals and prepaid expenses | 2,810,325 | 1,714,080 | 1,096,245 | 64.0% |
| Current assets | 48,109,930 | 48,433,042 | -323,112 | -0.7% |
| Trade payables | -12,274,865 | - 8,678,976 | -3,595,889 | 41.4% |
| Other payables to associates and related parties | -833,092 | - 442,162 | -390,930 | 88.4% |
| Advance payments | -10,684 | -39,885 | 29,202 | 0.0% |
| Outstanding tax and social security debts | 4,131,214 | -3,907,864 | -223,350 | 5.7% |
| Other payables | -5,472,450 | -3,824,696 | -1,647,754 | 43.1% |
| Accruals and deferred income | -1,929,005 | -2,189,703 | 260,699 | -11.9% |
| Current liabilities | -24,651,310 | -19,083,287 | -5,568,024 | 29.2% |
| Net working capital | 23,458,620 | 29,349,755 | -5,891,136 | -20.1% |
| Severance pay indemnity | -6,612,755 | -6,368,713 | -244,043 | 3.8% |
| Tax and social security debts (beyond the following fiscal year) |
- | - | 0 | 0.0% |
| Other non-current liabilities | -1,076,727 | -1,040,398 | -36,330 | 3.5% |
| Non-current liabilities | -7,689,483 | -7,409,110 | -280,372 | 3.8% |
| Invested Capital | 61,200,296 | 69,628,981 | -8,428,685 | -12.1% |
| Shareholders' Equity | -31,376,275 | -31,873,399 | 497.124 | -1.6% |
| Short-term Net Financial Position | -2,623,096 | -10,693,185 | 8,070,089 | -75.5% |
| MLT Net Financial Position | -27,200,925 | -27,062,397 | -138,528 | 0.5% |
| Net equity and Net financial debt | -61,200,296 | -69,628,981 | 8,428,685 | -12.1% |
CASH FLOW STATEMENT
| 30/06/24 | 30/06/23 | |
|---|---|---|
| A) Cash flow from operations (indirect method) | ||
| Net profit (loss) | 1,498,563 | 989,276 |
| Income taxes | 1,368,761 | 923,891 |
| Financial charges/(income) | 1,679,104 | 1,239,705 |
| Losses (gains) from asset disposals | -8,960 | - |
| 1. Profit (loss) before taxes, financial charges, dividends and losses (gains) from asset disposals |
4,537,468 | 3,152,872 |
| Adjustments for non-cash items that had no impact on net working capital |
||
| Provisions | 708,091 | 701,368 |
| Depreciation/amortization of fixed assets | 4,018,421 | 3,788,978 |
| Financial instruments | 9,645 | 47,201 |
| Others upward/(downward) adjustments for non-cash items | -403,384 | -25,391 |
| Adjustments for non-cash items that had no impact on net working capital |
4,332,774 | 4,512,156 |
| 2.Cash flow before changes in net working capital | 8,870,243 | 7,665,028 |
| Changes in net working capital | ||
| Decrease/(increase) of inventories | -13,036 | -196,348 |
| Decrease/(increase) of trade receivables | 2,684,601 | - 540,620 |
| Decrease/(increase) of trade payables | 3,595,889 | 1,192,353 |
| Decrease/(increase) of accrued income and prepaid expenses | -1,096,245 | - 482,415 |
| Decrease/(increase) of accrued charges and deferred income | - 258,789 | -789,622 |
| Other variations of net working capital | - 472,044 | 1,809,034 |
| Changes in net working capital | 4,440,377 | 992,382 |
| 3. Cash flow after changes in net working capital | 13,310,620 | 8,657,410 |
|---|---|---|
| Other adjustments | ||
| Interest received/(paid) | -1,681,014 | -1,239,705 |
| (Income taxes paid) | -747,784 | -923,891 |
| (Decrease of severance and other provisions) | - 427,719 | - 432,675 |
| 3. Cash flow after other adjustments | -2,856,518 | -2,596,271 |
| CASH FLOW FROM OPERATING ACTIVITIES (A) | 10,454,102 | 6,061,139 |
| B.Cash flow from investing activities | ||
| Tangible assets | ||
| (Additions) | -601,271 | -2,686,664 |
| Disposals | 78,441 | - |
| Intangible assets | ||
| (Additions) | -1,099,557 | -1,674,274 |
| Disposals | - | - |
| Financial assets | ||
| (Investments) | -17,657 | - 215,448 |
| Disposals | - | - |
| CASH FLOW FROM INVESTING ACTIVITIES (B) | - 1,640,043 | - 4,576,386 |
| C. Cash flow from financing activities | ||
| Third parties | ||
| Increase/(decrease) of short term loans | -1,310,063 | -1,435,362 |
| Increase/(decrease) of long term loans | 6,119,144 | 3,267,995 |
| Loans repayment | -5,000,890 | -5,346,454 |
| Operation on Shareholders' Equity | ||
| Dividends | - 565,750 |
- |
| Subscription of capital | - | - |
| CASH FLOW FROM FINANCING ACTIVITIES (C) | -757,559 | -3,513,821 |
| INCREASE/(DECREASE OF CASH AND CASH EQUIVALENTS (A+B+C) | 8,056,501 | -2,029,068 |
|---|---|---|
| Exchange rate variation of cash and cash equivalents | -35,752 | 29,389 |
| Cash and cash equivalents as of January 1st | 9,287,425 | 18,486,312 |
| Cash and cash equivalents as of June 30 | 17,308,174 | 16,486,634 |