• Revenue Growth: 8% at constant exchange rates in Q3 2024.
• Recurring EBITDA: EUR 115 million with a margin of 20.3% in Q3 2024.
• Net Financial Debt: Approximately EUR 1.07 billion.
• Store Expansion: 100 new stores in the US, reaching a total of 400 direct retail stores.
• M&A Investment: EUR 184 million in the first nine months of 2024.
• Organic Growth: 4% in Q3 2024.
• EMEA Revenue Growth: Approximately 4% at constant FX in Q3 2024.
• Americas Revenue Growth: 15.3% at current FX in Q3 2024.
• Asia Pacific Revenue Growth: Around 7% at constant FX in Q3 2024.
• Net Profit: EUR 17.5 million recurring net profit in Q3 2024.
• Free Cash Flow: EUR 50.6 million in the first nine months of 2024.
• Points of Sale: Achieved 10,000 points of sales globally.

• Warning! GuruFocus has detected 5 Warning Signs with RMNI.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Amplifon SpA (AMFPF) achieved an 8% revenue growth at constant exchange rates, outperforming the market despite challenging conditions.
• The company expanded its direct retail network in the US, adding 100 stores since January 2024, enhancing its strategic position.
• Amplifon SpA (AMFPF) reported strong performance in Asia Pacific, with revenues up 7% at constant FX, driven by solid organic growth.
• The company invested EUR184 million in M&A activities, significantly increasing its global points of sale to 10,000.
• Amplifon SpA (AMFPF) launched a new television commercial in Italy and Spain to strengthen brand positioning and drive sales.

Negative Points

• The European market remained flattish, impacting Amplifon SpA (AMFPF)'s growth, particularly in key markets like Germany and France.
• Recurring EBITDA margin decreased by 40 basis points to 20.3%, due to lower operating leverage and higher marketing investments.
• The US market growth slowed to around 4% in Q3, down from double-digit growth in the first quarter.
• The company faced a negative FX impact of 1.2%, primarily due to the depreciation of the US dollar and Argentine peso.
• Free cash flow decreased by 30% in the first nine months, largely due to higher working capital absorption.

Q & A Highlights

Q: On the reiterated top line guidance and increased M&A contribution, does this imply a lower organic growth for the year? Is mid-single-digit organic growth in Q4 realistic, and do you expect acceleration into 2025 outside of France? A: Enrico Vita, CEO: The M&A contribution is above 3%, around 3.5% to 3.7% year-to-date. We expect to overperform the market growth, which is around 3% this year. We aim to continue outperforming by 1% to 2%, despite the European market's slower growth. We anticipate the European market to improve next year, with easier comparisons and fundamental growth drivers.

Q: Can you elaborate on the margin impact from M&A in the US, and would margins have grown without M&A? A: Enrico Vita, CEO: The main negative impact on margins in the Americas is from the transformation of the Miracle-Ear network from franchise to direct retail. We've acquired over 100 stores this year, which requires time for integration and performance improvement. Without M&A, margins would have likely grown.

Q: Regarding the EMEA market, do you have evidence of acceleration in Q4, or is it wishful thinking? A: Enrico Vita, CEO: We hope it's not wishful thinking. The European market showed positive development in Q1, flattish in Q2 and Q3. We expect normalization in Q4 and growth in 2025, especially with France's contribution. The fundamentals for growth are present, and we anticipate improvement.

Q: What are your expectations for growth in North America, considering tough comps and Apple's hearing aid tech in AirPods? A: Enrico Vita, CEO: The US market has grown in line with expectations of 6% to 7% year-to-date, and we expect similar trends in Q4. Apple's AirPods target a different segment with mild losses, not our core segment. Our value-added services differentiate us from OTC devices.

Q: On the French reform anniversary, are you confident about market growth assumptions for next year, and have you started lead generation activities? A: Enrico Vita, CEO: We are preparing for next year, increasing capacity and lead generation. We expect the market to grow above 10% next year, with significant growth starting from Q2. We have considered various assumptions, including potential leakage, in our growth estimates.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.