Tokmanni - Adj. EBITDA miss despite revenue beat; upgrades guidance
Tokmanni beat estimates on revenue, but missed them on adj. EBITDA. Stronger revenue is driven by LFL growth of 4.0% vs. our 2.0% expectation, whereas the adj. EBITDA miss is driven by higher than expected OPEX. Tokmanni upgrades its guidance after the third quarter for revenue: revenue growth will be “strong” (prev: “good”) in 2018, based on new openings and “good” (prev: “low single-digit”) LFL growth. Adj. EBITDA margin guidance is intact. The change in guidance wording improves trust for seasonally strong Q4, in our view. Despite the adj. EBITDA miss we consider the report to be fairly good, due to stronger LFL growth and stable gross margin.
- Q3 revenue was EUR 211m vs. EUR 207m/208m Evli/cons, 1-2% above estimates. Revenue grew by 7.8% y/y, driven by 4.0% LFL growth (Evli exp. 2.0%) and new openings. Good LFL growth is attributed to assortment improvements and investments in prices.
- Q3 adj. gross margin was 34.2% vs. 34.4% Evli estimate. the share of direct imports and PL products of total sales remained flat y/y.
- Q3 adj. fixed costs in total were EUR 54.9m (26.1% of revenue) vs. EUR 52.6m (25.4% of sales) Evli view.
- Q3 adj. EBITDA was EUR 18.2m (8.6% margin) vs. EUR 19.6m (9.5%) Evli and EUR 19.2m (9.2%) consensus.
- 2018 guidance upgraded: revenue growth will be “strong” (prev: “good”) in 2018, based on new openings and “good” (prev: “low single-digit”) LFL growth. Profitability (adj. EBITDA margin) is expected to increase in 2018E (intact). CAPEX will be at the level of depreciations in 2018.