Stemmer Imaging reported its annual report last Thursday, and the stock hasn’t really moved. Yet I have some pain points with the report, which I want to address in this article.
Full-year
Stemmer has reported full-year results in line with its revised outlook of 144-151 million euros, down significantly from the initial FY 2023 guidance issued after FY 22 of 163-176 million euros in revenues. At the same time, EBITDA guidance of 26-32 million hasn’t changed and was achieved with 27 million. This shows Stemmer's outperformance on its margins, while a deteriorating market environment has hit revenue growth and turned FY 23 into a 5% revenue decline. Cash flows have been strong and Stemmer announced a 2.7 euro dividend. Stemmer ended the year with a healthy net cash position of 36 million, compared to around 200 million in market cap.
Q4 results
Q4 was weak, as expected, with a 21% revenue decline and a 32% order intake decline. Profits have held up nicely, but profitability was below last year's 21.2% EBITDA for the quarter. Gross margin, however, climbed to a record high of 41.3% due to positive year-end effects.
Stemmer also announced its entry into the North American market by acquiring Phase 1 Technologies, a 38-year-old machine vision specialty distributor with a high overlap of suppliers and a presence in industrial and innovative artificial vision end markets. The deal is expected to close in Q2, but until then, we won’t get details. Stemmer expects to expand its portfolio with new products and services, which it can also try in the European markets.
That said, let’s dive into my worries from this report.