Release Date: February 28, 2025

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

Positive Points

• Dovalue SpA (FRA:1DB0) achieved significant business growth in 2024, surpassing their annual target with 9.9 billion in new business.
• The company successfully completed a major M&A transaction and a rights issue, strengthening its market position.
• Dovalue SpA (FRA:1DB0) reported strong cash flow generation, exceeding expectations with a leverage ratio of 2.4 times.
• The integration of the Gardens acquisition is progressing well, with 20% of synergies already realized and expectations to reach 40% by the end of 2025.
• The company has a solid pipeline of 55 billion projected over the next 18 months, indicating strong future growth potential.

Negative Points

• EBITDA excluding non-recurring items decreased by 7.8% compared to 2023, primarily due to fewer disposals and a challenging real estate market in Spain.
• Operating expenses increased slightly, impacted by wage inflation in Italy and the initial consolidation of Gardens.
• The Spanish market faced challenges with a 20% decline in gross revenues due to delays in debt recovery proceedings.
• The company faces higher financial charges due to new term loans and bond issuances related to the Gardens acquisition.
• There is uncertainty regarding the impact of ongoing bank consolidations on Dovalue SpA (FRA:1DB0)'s flow contracts and potential changes in NPE flows.

Q & A Highlights

• Warning! GuruFocus has detected 6 Warning Signs with FRA:1DB0.

Q: Can you provide more details on the dynamics below EBITDA and expectations for the next year? Also, what growth should we expect from ancillary services? A: Below EBITDA, we have net breakdowns on property, plant, and equipment, and intangible assets, which we expect to increase in 2025 due to the full impact of the garden acquisition. Ancillary services are a key growth driver, with efforts to expand data products, legal services, and real estate services, especially in Italy and Greece. We anticipate further growth in 2025 as the advisory and mortgage brokerage divisions are now operational. Unidentified_3 and Unidentified_2

Q: Could you provide a pro forma number for 2024 including gardens from the start of the year, and explain the bridge between 2025 EBITDA and free cash flow? A: The pro forma EBITDA for 2024 was around 210 million. For 2025, the bridge to free cash flow includes expected capital expenditures, redundancy costs, financial charges, and tax impacts, leading to a free cash flow guidance of 60-70 million. Unidentified_2 and Unidentified_3

Q: How does bank consolidation impact your flow contracts, and are you interested in servicing tax credits? A: Bank consolidation typically includes clauses that protect existing contracts, allowing for potential expansion of flows. Regarding tax credits, we are interested in this market, especially given the large volume of tax credits in Italy. We have experience managing pension and tax credit securitizations and are positioning ourselves for potential opportunities. Unidentified_2

Q: Can you provide more color on Greece's performance, particularly regarding secondary sales, and when can we expect more information on dividend distributions? A: Secondary sales in Greece depend on sellers' timing, and we expect these to recover in early 2025. Regarding dividends, we aim to distribute 50-70% of reported net income excluding non-recurring items, with more clarity expected by the third quarter. Unidentified_2

Q: What is the outlook for the tax credit market, and what is happening with guaranteed loans? A: The Italian government is exploring securitization or direct assignment for tax credits, and we are prepared to manage these credits. For guaranteed loans, defaults have been low, but the market has seen significant transactions involving these guarantees, indicating a clear trend. Unidentified_2

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