Douglas - Spot-On Strong

All,

We remain long the SUNs for 5% of NAV since “purchase" in early Jan.

Very strong LfLs, EBITDA, Cash Flow throughout the business. All stats effectively track model.

Sales were overall 2% higher than we had re-modeled in recent days.

Adj. EBITDA was spot on, although once provisions are accounted for was some E7m lower than model, but still 15% up on last year.

Cash Outflow on taxes was significantly better than we had feared.

Cash Inflow on WC was lower by about the same amount.

CapEx was E5m more than model.

Thus Free Cash Flow was spot on - up 16% YoY.

Financing Cashflow includes a E-15.4m repayment of financial liabilities in connection with a prior acquisition, but debt remains unchanged.

Thus Cash is E17m lower than model at E 362m.

Net debt is at E1.943m or 5.4x through the SUNs by the company’s slightly more favourable calculation than ours, but on target. 

By Country:

Germany: Sales E6m stronger than model, but EBITDA slightly disappointing with E5m less than model - only a combined 8.8% margin.

France: Sales E5m stronger than model. Adj. EBITDA spot-on.

S-W Europe: Sales E10m stronger than model. Adj. EBITDA spot-on.

E Europe: Sales E5m stronger than model. EBITDA E2m weaker than model.

Please bare in mind that this is seasonally Douglas’ strongest quarter and WC inflow is strong, but will flow out again.

The outperformance in Sales seems to have occurred only online.

So our questions will revolve around the competitive landscape in Germany again.