Quest Holdings S.A. (QUEST) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. I'm Vassilios, your chorus call operator. Welcome, and thank you for joining the Quest Holdings Conference Call and the Live Webcast to present and discuss the First Half 2025 Financial Results. The event today provides the opportunity for participation via audio conference and live webcast, where a presentation deck is provided for your convenience. [Operator Instructions] And the conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Quest Holdings management. Gentlemen, you may now proceed.

Welcome, ladies and gentlemen. My name is Alexandros Roustas, Investor Relations Officer of Quest Holdings. As usual, I'm joined today by our CEO, Mr. Apostolos Georgantzis; and our Deputy CEO and CFO, Mr. Markos Bitsakos. We are here to present the financial results of the first semester of 2025 and to answer your questions. I will now hand over to Mr. Markos Bitsakos for his opening remarks.

Good afternoon, everyone. My name is Markos Bitsakos, and I serve as the CFO and Deputy CEO of Quest Group. During the first half of this year, supported by the addition of Benrubi to our portfolio, Quest Group delivered double-digit growth in sales, EBITDA and EBT. Earnings after tax and noncontrolling interest came in slightly above last year's levels, reflecting the impact of the minority rights of 20% in ACS and 30% in Benrubi as well as the increased corporate income tax. Now looking at our business segments. Growth was primarily driven by Commercial Activities and IT Services. Within the Commercial Activities, sales were sponsored by the Apple system, in FoQus Greece, Clima Sector and the Benrubi addition. In IT Services, the demand was fueled by the Greek public sector digital transformation projects and from contracts with EU institutions. EBITDA expansion was underpinned by IT Services, the Benrubi integration and the Apple ecosystem. Meanwhile, the Courier business recorded low single-digit growth and the Energy segment posted a slight decline mainly due to adverse weather conditions and grid curtailments imposed to safeguard system stability. According to our published financial statements on a consolidated basis, key results for the first half of 2025 are as follows: The group revenues reached EUR 683 million, up approximately 10% year-over-year, led, as I previously said, by Uni Systems and further supported by the Apple network, the IQT subgroup and the newly acquired Benrubi. The consolidated EBITDA came at EUR 47.5 million, 14.2% increase versus 2024. Earnings before tax totaled EUR 32.9 million, up by 20% year-over-year. And earnings after tax and noncontrolling interest amounted to EUR 20.4 million, representing a smaller increase by 1.4%. The smaller increase in earnings after tax and noncontrolling interest relative to earnings before tax is mainly attributable to 2 factors. First, the significant increase in taxes during the first half of 2025; and second, the impact of minority interest on ACS and Benrubi profits. Higher tax burden arises from deferred taxes from time differences in revenue and expense recognition, mainly at Uni Systems and ACS, where IFRS and tax reporting create occasional mismatches. Several bonuses were distributed as profit distribution, which elevated the corporate tax slabs, and the related amounts were granted in June 2025, following the tax filing of 2024. And last, as usual, there are nondeductible expenses recorded in certain subsidiaries. To give you an example, as a result of what I mentioned about the increased taxes, Uni Systems, recorded an effective tax rate of 39%, which, of course, is expected to normalize in the near future, while ACS recorded an effective tax rate of 32% for similar reasons. Now going to minority interest. In ACS, we now record 20% minority interest following the partial sale of ACS to GLS. And in Benrubi, a 30% minority interest is attributable to the Benrubi minority shareholders. To give you the pictures of the minority right impact, the relevant amount for both companies for this period is approximately EUR 1.9 million. Now going to the balance sheet and the cash position. As of the end of June 2025, Quest Group recorded a net cash position of EUR 0.6 million compared to EUR 28 million of net debt in June 2024. An 82 min net cash at the year end of 2024. The decline from December 2024 is the outcome of 3 main reasons. The Benrubi acquisition, which absorbed approximately EUR 31 million from net cash, meaning acquisition of 70% including its debt, plus the rest of the CapEx, which stood at EUR 7.6 million. The second reason is the dividend distributed in June, which was circa EUR 32 million. And lastly, the seasonal working capital cycle, which is always more demanding in the first half of the year. So now we'll give the presentation back to Alexandros.

Thank you, Markos. Now diving deeper into our segments. We observed that the Commercial Activities segment, which I remind that it consists of several companies such as Info Quest, iSquare, iStorm, Quest on Line, Clima Quest, FoQus, Team Candi, [ ITT ] Cyprus and Benrubi as of the 1st of February this year. Continue to grow by roughly 12.4% of the sales level, while EBT [ phased ] by 36% year-over-year, boosted also by Benrubi integration and the decreasing interest rate. IT Services sector sales, which is mainly Uni Systems, also improved by roughly 10%, while its EBT grew by about 19%. Postal Services, that is ACS sales were flat and EBT grew by about 5%. It should be noted here that sales were affected by fewer working days versus last year and slowing growth. Last but not least, Quest Energy segment sales stood lower by about 8% due to adverse weather conditions and power grid curtailments, as Markos said, with a slight increase in profitability before taxes. At this point, we should note that on August 8, 2025, Quest Energy signed a binding agreement with international independent power producer for the sale of a significant part of its portfolio, representing a total installed capacity of roughly 36.7 megawatts for approximately EUR 36 million on a debt-free and cash-free basis. The completion of the transaction is subject to regulatory approval and the satisfaction of customary conditions present. As previously communicated, the energy sector has not been a main strategic focus for Quest Group, contributing marginally to consolidated results. In early 2024, we suspended new investment in this segment due to grid curtailments and substantial delays in the approval process for greenfield projects. This partial divestment enhances our liquidity while allowing us to closely monitor developments in the energy market. Now I should pass over to our CEO, Mr. Apostolos Georgantzis to provide the outlook.

Thank you, Alexandros. Good afternoon from me too. I'm Apostolos Georgantzis, Quest Group CEO. As already been explained by Markus and Alexandros, most of our segments grew during the first half. EBITDA and EBT grew at double-digit growth rates, allowing us to be more optimistic for the positive cost also for the remaining year. Now going into more details of sector, the outlook is as follows: Regarding commercial activity sector, for the full year 2025, we estimate growth in sales and higher growth, double digit in EBT, assisted also by the acquisition of Benrubi as well as from the drop of the interest rates. Regarding the IT Services sector, this segment continues to be positively affected by the strong demand for IT Services, while it has a high backlog of signed projects exceeding already EUR 700 million. And in this sector, we also see double-digit growth and improved profitability for the whole of the year. Going to the third sector, which is the Postal Services sector. Our estimations for 2025 include a low single-digit growth in sales and higher profitability growth, mainly driven by e-commerce growth as well as from efficiency improvements. We also estimate the second half to be stronger than the first half. At the same time, we continue to invest in developing the last mile network of the company, which currently amounts to about 1,100 lockers in operation. Finally, the Renewable Energy sector and Quest Energy, for this sector, our estimation for the full year is for a slight drop in sales during the first half and similar to slightly lower than last year's EBT. Of course, we have to note that the -- as Alexandros explained before, depending on the approval of the transaction regarding Quest Energy, this sector will be affected, but we expect this change to be mainly for the next year. Now going on consolidated sales. On a consolidated basis, our estimation for the full year is positive for revenues and profitability. Sales are estimated to grow at a high single digit to low double-digit rate, while EBITDA to surpass EUR 100 million. This estimation has only been validated by the course of the first half. Quest Group current cash position is solid with well above of EUR 200 million in cash and available credit lines, allowing us to continue our planned growth investments and to endure any hardships. Now let me pass back to Alexandros.

Okay. That was our brief overview for the first semester of 2025 as well as the outlook for the full year. We are now happy to answer your questions.

[Operator Instructions] The first question comes from the line of Andriopoulos [ Giorgos ] with [ Piraeus ] Asset Management. The next question comes from the line of Svyriadi Natalia with Eurobank Equities.

I hope you can hear me. I was wondering if you could remind us, in a way, the investment plans you have in Uni Systems and in the Courier system for the current year? And what should we expect there? And I have 1 more question on the commercial activities. If you have any other brands in view, if you're looking into other corporations in the white appliances segment or something that you could discuss upon.

Natalia, thank you for your questions. This is Markos. As far as the CapEx is concerned, I just remind you that the initial -- our initial plan for the year CapEx was around EUR 55 million. 50% of this amount regard to Benrubi, which is already done. And then 35% was associated with the ACS locker network, which is under -- is rolling right now. We still anticipate to be close to those numbers, if not EUR 55 million, I would guess something in the range between EUR 45 million to EUR 50 million for the whole year.

So this would leave another EUR 10 million to EUR 12 million going ahead, if I understand correctly, from the EUR 33 million you've already written in H1.

Yes. More or less, yes.

Now Natalia, this is Alexandros. Hello?

Hello.

Regarding the white appliances, we don't have anything in our pipeline for the moment. I think that the 2 initiatives we took during the last 2 years, which is Toyotomi in the Clima sector and Benrubi are growing. We have much to gain from these 2 moves in order to absorb them and develop them correctly. And if something comes in our pipeline, we'll see, but we have nothing for the moment.

Okay, great. May I have a follow-up also on the growth rates like in the EBITDA. We are running around 14% in H1. Would this be a safe assumption to have also for the full year, like more or less around these numbers, assuming that Q4 also is a strong quarter usually. So is this something you could see, or should we be a bit more cautious in a way?

Natalia, this is Apostolos. Regarding the question about the EBITDA growth for the end of the year, we expect this trend that we've seen during the first half to continue. Therefore, we expect a growth rate in EBITDA around with the same, let's say, numbers like we've seen in the first half. It could be a bit better as well. But let's stick to the same approximately numbers like we've seen in the first half. So we estimate a similarly good second half of the year, and should some things go well, could go a bit better as well. Now I would like also to add something to what Alexandros mentioned about the white appliances. And though we don't have any particular, let's say, M&A plans at the moment for white appliances. We have plans to expand our current businesses and especially the Clima sector gradually abroad, which will give us bigger footprint and increase sales from this sector in the future.

The next question comes from the line of Andriopoulos [ Giorgos ] with [ Piraeus ] Asset Management.

I would like to ask regarding the performance of ACS. Do you see any normalization in the second half because we saw in the first half, the sales were a bit flat. And also for the commercial activities, I would also like to ask if we should expect a similar growth in sales in the second half and the digital tools for small and medium companies to continue this program.

This is Apostolos, again, Apostolos Georgantzis. To answer to the first question, regarding ACS, our estimation is that the second half will be better than the first half versus last year. So we expect to see some growth over the second half in sales and improve profitability due to efficiencies and other reasons. Therefore, the second half is going to be better than last year, improved versus the course of what we've seen during the first half.

[indiscernible]

Can you repeat? I don't know whether -- I think that's what you asked about ACS. Could you please repeat the second question because it wasn't so clear to us. It wasn't well heard.

Yes. The second question is about the commercial activities. Regarding the digital tools for SMEs program, which goes active for the first half and provided some sales boost. Do you expect this to continue in the second half as well?

This is Alexandros, again. As far as we know, this program will not continue in the second half. However, we are optimistic about the services -- the Commercial Activities sector. The growth you see is not fully caused by the tools. There are several -- all the companies have contributed to this growth. And we are very optimistic for the second half of the year as we stated in our outlook.

Okay. So should we expect a 10% -- around 10% sales growth in total?

Yes, it could be. It could be.

[Operator Instructions] Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Apostolos Georgantzis for any closing comments. Thank you.

Dear all, I would like to thank you for your participation and interest in our company, and its prospects and look forward to talking to you again in our next IR call in the beginning -- in the end of November, beginning of December. Thank you very much.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a good afternoon.