Lindbergh SpA FY 2024

Surfacing the underlying profitability

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Welcome,

In this Earnings Update, I will have a closer look at the recently published results of Lindbergh SpA.

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On March 26, Lindbergh published its FY 2024 results:

• Total revenues of EUR 24.1 million (-10 %)

  • Network / Warehouse Management of EUR 11.8m (-47 %)

    • the French business was sold during the year and is therefore not included anymore in the figures

  • Waste Management / Circular Economy of EUR 3.7 million (+24 %)

  • HVAC of EUR 8 million (+575 %)

  • Other revenue of EUR 0.6 million (+26 %)

• EBITDA of EUR 4.3 million (+26 %)

  • EBITDA margin of 17.9 % (vs. 12.7 %)

• EBIT of EUR 2.4 million (+37 %)

  • EBIT margin of 9.8 % (vs. 6.4 %)

• Net result from continuing operations of EUR 1.6m (+37 %)

• Net result including operations sold of EUR 0.02 million (-200 %)

At the first glance, the top line looks worse than its actually is. The decrease in revenues is due to the deconsolidation of the French business that was sold during the year. So all the revenues and costs generated by the French business are not included in the numbers for 2024, while they are included in the numbers for 2023. In 2024, Lindbergh France generated approximately EUR 10.6 million in revenues which is nearly half of the total revenues generated in the Network Management business unit and which explains the decrease by 47 % yoy. While revenues of the French business have been nearly flat yoy, the profitability was substantially worse with a loss of EUR 1.59 million. So one can say that the management of Lindbergh has failed in turning around the French business. The CEO already mentioned multiple times, that the French market was different than the Italian market and that they were not able to copy the profitable model from Italy. In the end, entering the French market was a bad management decision and one can criticize the Lindbergh management for this decision. However, the management has realized it and openly addressed the topic and came to the decision to sell this business unit and instead focus on the expansion in the HVAC market. When I now look at the figures of the French business, I think selling it was a good decision. It will also help to show the market the good underlying margin profile of Lindbergh, as we already see in the increasing margins this year. CEO Michele Corradi on that topic:

“Leaving the French market at the end of 2024 was an important turning point in our growth strategy. For the first time, the consolidated balance sheet numbers very clearly show the strong increases in margins of operations not sold, with the EBITDA group margin going from 12.7% to 17.9% of revenues and the net result from 4.3% to 6.7% of revenues. This shows how solid our position is in Italy for all group BU. We are very satisfied with the organic growth of Waste/Circular Economy BU (+24%) and that of operations in the HVAC sector (with revenue nearing 8 million).”

However, when only looking at the Italian business of the Network Management, revenues also slightly declined. Below you can see the core customers base of Lindbergh in this business unit and when looking at the results of some of these customers, most of them also struggled to grow in 2024.

So I think the revenue decrease is mainly due to lower demand/technicians served as a result of industry wide headwinds and not a result of a bad service by Lindbergh which would definitely be more concerning. Lindbergh has to work on widening its customer base in 2025, when growth with existing customers is limited. CEO Michele Corradi also addressed the headwinds in their core segment:

“We cannot, however be satisfied for the trend of the Network Management BU in Italy as it has not grown for the first time in many years. Nothing to be alarmed about. Our market position is solid and relations with historical customers continue. We are working to get back on the organic growth route and recover a few margin points lost in 2024.”

For 2025, the management is expecting to return to organic growth in the Network Management business unit, although not at levels prior to 2024. Relations with historical customers are very good and the Italian market is well protected. A pair of new collaborations will be activated with important customers which could lead, medium-term, to a good increase in revenue through up-selling operations.

In contrast to the slight decline of the Italian Network Management business unit, the Waste/Circular Economy business unit performed very well with increasing revenues by 24 % yoy. Lindbergh signed some pretigous contracts in this segment with customers like LVMH. The management expects sustained organic growth for this business unit, in line with the growth of 2024 (+24 % yoy).

The HVAC segment, of course shows the biggest growth as a result of the multiple acquisitions during the year. Below you can see all the companies active in the HVAC sector that Lindbergh has already acquired through its wholly owned subsidiary SMIT.

So the growth here is mainly acquired, which is normal for a roll-up strategy. It remains to be seen how good Lindbergh is at integrating these companies and realizing some synergies. Below, you can see the strategy of Lindbergh in the HVAC segment.