• We cut '24e and '25e EBITDA by 17% and 8%
• Refocusing of Aurdel to improve margin stability
• '25e EV/EBIT of ~11x

Focusing on efficiency

Q1 was a tough quarter for electronics retailers. DistIT reported sales that were somewhat weaker than we had expected, but EBIT was better thanks to a favourable gross margin mix. The company also continued to take the right steps in terms of reducing its working capital. Given that B2B sales in Aurdel's market appear to be weakening, we would not expect a quick return to growth in the coming quarter. However, the comps in Q4'24e are easy, and if conditions improve slightly for B2C, then a return to organic growth in the latter half of the year is likely.

Estimate changes

We cut sales by 7-10% for '24e-'26e to better reflect the focus on the company's own rather than external brands in Aurdel. This means, however, that our gross margin estimates rise by 130bp and 160bp for '25e and '26e, respectively. We also cut adj. EBITDA for '24e and '25e by 17% and 8%, respectively, as we incorporate somewhat higher opex related to the refocusing and reorganisation of Aurdel. Our new estimates therefore imply that '24e EBITDA is at the lower end of guidance adjusted for the divestment of Sominis. EFUEL, which has been subject to both supplier- and consumer-related headwinds, has potential to regain operating momentum once additional suppliers are added to the roster, and it could start contributing to growth again given that the comps are becoming easier. Based on present circumstances, we still expect a brief return to positive organic growth sometime in H2'24e and therefore also a recovery in the company's profitability.

Implied valuation

Based on our revised estimates, the company is trading at a '25e EV/EBIT of ~11x.