Equity Research Enrad, Q3 2024: Sales in line with expectations, but better than expected gross margin

Today, Friday 25 October, Enrad AB (“Enrad” or the “Company”) published its interim report for Q3 2024. Below is a summary of our first impressions of the report’s outcome and the income statement’s deviation from our forecasts.

• Net sales for the third quarter reached about SEK 8.0 million, equaling our estimates. However, production challenges prevented the Company from delivering all customer orders as planned.
• The Q3 gross margin of 59.9% was well above our estimated gross margin of 50.0%.
• Despite strong gross margin, EBIT amounted to approx. SEK 1.0 million lower than our EBIT-estimate. The deviation, including the higher gross margin, corresponds to SEK 1.5 million more in personnel and other expenses than our estimates.
• The Company’s cash holdings amounted to approximately SEK 4.6 million on 30 September 2024, compared with SEK 3.2 million on 30 June 2024, corresponding to a positive cash flow of SEK 1.4 million.
• Capital tied up in inventories and receivables amounted to SEK 24.1 million on 30 September 2024, while inventories of approximately SEK 15.6 million were pledged for approximately SEK 7.0 million.

We intend to update our analysis of Enrad shortly.

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