Strax Q4 2023: Inventory write-off and weak sales. The restructuring continues.
Research Note
2024-02-28
07:11
Strax continues to focus on reducing its debt and restructuring its operation. This quarter, the company had to implement inventory write-downs, impacting the gross profit and subsequently leading to a decrease in EBIT. Additionally, sales fell below our initial estimates.
Fredrik Reuterhäll
Oskar Vilhelmsson
Net sales for the period were EUR5m. This result fell short compared to our estimate of EUR8.3m mainly because weak Health & Wellness products according to the management.
During the quarter Strax took a EUR14m inventory write-off. COGS came in at EUR-17m. Adjusted for the write down, COCS was EUR-3mvs our estimate of EUR-5m. OPEX EUR-25m vs our estimate of EUR-3m due to non-recurring costs and charges. EBIT came in at EUR-14.6m.
| Strax: Actual vs Estimate (MEUR) | ||||
| Q4'23A | Q4'23E | Diff vs Est. | Y/Y Growth | |
| Net sales | 5 | 8 | -36% | -75% |
| COGS | -17 | -5 | -209% | |
| Gross Profit | -12 | 3 | -512% | -155% |
| Total opex | -25 | -3 | -682% | |
| EBIT | -14.6 | -0.6 | -2493% | -169% |
| Gross Profit Margin (%) | -220% | 34% | -254pp | -320% |
| EBIT Margin (%) | -277% | -7% | -270pp | -377% |
| Basic EPS | -0.15 | -0.07 | -1.2 | |
| Source: Redeye Research |
Operational cash flow came in at EUR1.2m, and EUR2.1m for the full 2023. The cash level at the end of the quarter is EUR1.1m. At the end of Q3 it was EUR0.9m.
Interest-bearing debt is EUR12m (EUR37.6m in Q3-23).
Overall another very messy quarter. Management in Strax has been working for the past 18 month focusing on restructuring and divesting operations in order to cut down its heave debt burden. We believe this will continue for at least two quarters. Moreover, because the underlying market is still beaten down, the underlying demand is not helping out. If this continue for a longer period of time, it will be even more difficult to turn the company around.
We will publish an update tomorrow, with a lower adjusted valuation range by approximately -15%.
Disclosures and disclaimers