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Third party research

Gentoo Media: Solid cash flow guidance - ABG

Gentoo Media

This is a third party research report and does not necessarily reflect our views or values

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* Q3 adj. EBITDA 11% below FactSet consensus* Raises operating cash flow guidance* Restatements yielded higher H1'25 revenue & adj. EBITDAQ3 outcomeGentoo reported Q3 sales of EUR 22.7m, which is down 23% y-o-y and 9% q-o-q, 4% below ABGSCe and 7% below Factset consensus. Moreover, adj. EBITDA of EUR 9.3m was 14% below ABGSCe and 11% below consensus In similar fashion to Better Collective, the sports margin was weak in September. However, Brazil appears to have been a bit weaker. Opex was slightly higher than we had anticipated, contributing somewhat to the adj. EBITDA miss. That said, the bulk of the aforementioned miss is due to the sales miss.Cash flow guidance upgradedGentoo maintains its revenue and adj. EBITDA guidance. However, it has upgraded its cash flow guidance, which is positive for the company's financial position. Given the restatements, which impacted H1'25 adj. EBITDA by EUR +2.2m, the maintained adj. EBITDA guidance is technically an underlying downgrade based on our initial impressions of the report. However, given the maintained adj. EBITDA guidance, we expect the net mechanical estimate revisions to be flat.Mechanical estimate revisions flatThe Gentoo share is down 67% YTD, compared to OMXSGI, which is up 9% YTD. Based on our unrevised estimates, Gentoo is trading a bit below 6x '25e EV/EBITDA. Following the report, we expect consensus to maintain its EBITDA estimates, however, when considering the positive restatement impact, this implies negative underlying revisions.
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