Eezy as an investment - Will the cycle turn and Eezy with it?

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Let’s put this loser’s own releases here too.

I’ve picked out a few things here that aim for / relate to a better future.
Of course, in the same breath, one can note that this same thing has been practiced for a couple of years, a bit behind schedule.

Indeed, revenue was hampered by the transition to Franchise operations.
@Petri_Gostowski could ask about what such an entrepreneur gets and what it costs, approximately.
Why were those things done that were done, should more be added?

One-off costs almost explain the income statement, but it is real money and the company records it as expenses. And they occur regularly irregularly.

4/2025 savings program 4 MEUR, something has been done and 1 MEUR decided, this could also be asked in an interview if one comes up
What, where, when.

2Q2025 Operating cash flow 3.7 (!) MEUR, from which loan interest (1.1 MEUR) has been paid on top.
From that, investments of 1.2 MEUR have been paid,
And 2.5 MEUR remains.
From that, an additional 600 KEUR related to rents is deducted
And we are at the 1.9 MEUR level.
@Petri_Gostowski could thoroughly analyze this in an interview, is this a long-term effect of the decisions made, or just quarterly report gymnastics? Have the invoices been paid on time.
Big deal.

In April-June, the revenue of personnel services in group units decreased by 22%. Taking into account the revenue of franchise entrepreneurs, the revenue of the entire chain decreased by 11% compared to the corresponding period last year, which is in line with market development.

Our operating profit in the second quarter was negative, at -0.4 million euros (0.6). The negative operating profit is due to a decrease in revenue and one-off costs of 1.0 million euros (0.1). On the other hand, the savings measures of the profit improvement programs have started to take effect and have lowered the level of fixed costs.

In April 2025, we launched the third phase of our profit improvement program, aiming for a four-million-euro improvement in results. We have purposefully advanced the measures identified in the program. As part of the program, approximately 45 employment relationships ended during June-July, and we have also made decisions on annual savings of over 1 million euros in other fixed costs.

As of June 30, 2025, the Group had loans from financial institutions totaling 47.9 million euros (53.2), of which 44.8 million euros (46.8) were long-term. A revised loan agreement was negotiated with financiers in April 2025, agreeing on new covenant levels applicable to the loans.
The Group’s cash and cash equivalents on June 30, 2025, were 0.1 million euros (0.1).
The Group had total credit limits of 10.0 million euros, of which 0.6 million euros were in use on June 30, 2025.
The equity ratio was 55.0% (53.1%). The Group’s net debt, including IFRS 16 lease liabilities, on June 30, 2025, was 52.2 million euros (60.0), and net debt excluding IFRS 16 lease liabilities was 47.9 million euros (53.1). The net debt to EBITDA ratio was 6.2 x (4.7 x).
Operating free cash flow was 3.2 million euros (1.6) in April–June and 1.2 million euros (-0.6) in January–June.

Screenshot_2025-08-14-10-19-50-84_40deb401b9ffe8e1df2f1cc5ba480b12

Eezy Oyj’s Half-Year Report 1–6/2025: Chain Revenue Development in Line with Market, Profit Improvement Program Progressing as Planned - Inderes https://share.google/FCEDEOyqEAQ9UBgzK

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HELA timely published the industry turnover, showing a sharp decline compared to the previous year.
Eezy also declined in Q2 at the industry’s pace when franchise changes are taken into account.

Q2; -10.7%
6/2025: -7.8%
H1: -9.7%

The total turnover of the staffing industry, which includes leasing, recruitment, outsourcing, and additional services, was 353.9 million euros in the second quarter of 2025, from April to June. Turnover decreased by 10.7 percent compared to the corresponding period last year.

The value of June’s turnover was 122.1 million euros. Compared to June last year, turnover decreased by 7.8 percent.

Staffing Industry’s Q2 2025 TOP20 Turnover Review. Featuring on the TOP20 list is the fresh AiCan Yhtiöt from the restaurant and event sector. - Staffing Industry HELA Henkilöstöalan 2025 toisen kvartaalin TOP20 -liikevaihtokatsaus. Esittelyssä TOP20-listalla tuore AiCan Yhtiöt ravintola- ja tapahtuma-alalta. - Henkilöstöala HELA

HELA-TOP_June_2025.pdf https://share.google/lil3iQjiQB054m4rq

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@Kaisa_Vanha-Perttula interviewed Eezy’s new CEO Johan Westermarck today. The interview is attached:

Unfortunately, Spotify Creators is currently down, and the interview will only be available on Spotify later once our western neighbors get their platform back in order. :sweat_smile: Apologies for the delay to all Spotify users!

E: now also available on Spotify!

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Here is a fresh company report on Eezy from Petri. :slight_smile:

Eezy’s Q2 figures fell short of our forecasts. The contraction in demand was reflected in a revenue decline roughly in line with our expectations, while one-off items weighed down the operational result below our forecast. Considering these factors, however, we believe the development of the cost structure is encouraging, and we have kept our expectations for a clear improvement in results in the coming years unchanged. Reflecting these factors, we raise our target price to EUR 0.82 (previously EUR 0.75), but reiterate our reduce recommendation.

Quoted from the report:

Cash flow was quite good

In H1, Eezy generated EUR 3 million in operating cash flow, which reflected strong Q2 cash flow. To our understanding, this has been influenced at least in part by the development of net working capital as a result of the collection of active receivables. After investments and lease liability payments, however, free cash flow is EUR 0.8 million in the red at this level of operating cash flow. Thus, improving cash flow is key to strengthening the current financial position (net debt/EBITDA 6.2x at the end of Q2’25). This, in turn, requires an operational turnaround in results, as we estimate that no significant additional benefits can be realized from other measures (e.g., reducing lease liabilities, optimizing working capital, etc.).

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Indeed, revenue was negatively impacted by the transition to the Franchise operating model.
@Petri_Gostowski, one could ask about what such an entrepreneur gains and what it costs, approximately.
Why were those things done, what was done, should we add more?

Such an entrepreneur gains a large brand and “outsourced” administration, as Eezy provides support functions. The price, according to my information, is some % either directly from revenue or gross margin. Why? This is certainly one of those things where the right solution isn’t known until it’s tried, but especially in areas where demand is volatile or consists of small streams, my understanding is that a model where operations are run by a person bearing “entrepreneurial risk” has been effective in Eezy’s history.

2Q2025 Operating cash flow 3.7 (!) MEUR, from which loan interest (1.1 MEUR) was paid.
From that, investments of 1.2 MEUR were paid,
And 2.5 MEUR remains.
Another 600k EUR related to rents is deducted
And we are at the 1.9 MEUR level.
@Petri_Gostowski, this could be thoroughly dissected in an interview, is this a long-term effect of decisions made, or just quarterly “gymnastics”? Have invoices been paid on time?
Tough stuff.

This was discussed in the webinar, but certainly both. At the Q-level, no more detailed information on working capital was provided, but I would estimate that this is affected by certain timing factors, which depend on the timing of month-end closing and other factors. According to the CEO, there were several more permanent factors, but certainly working capital management and more active collection of receivables is one. Generally speaking, Eezy’s net working capital level has always been good; there’s always room for improvement somewhere, but I don’t see this as the route for continuously pushing more cash flow. It really starts from the top line, which is then a key factor for generating EBITDA (read: cash flow).

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Here are Petri’s comments on the staffing services industry’s July. :slight_smile:

According to the staffing sector’s revenue survey, the revenue of the 20 largest companies in the sector was approximately EUR 116 million in July, which corresponds to a decrease of just under 10% from the previous year. The overall market development is essentially linked to temporary staffing services, which accounted for approximately 84% of the largest players’ revenue in July. Consequently, the revenue from temporary staffing services was EUR 100 million, which corresponds to a decrease of nearly 9% from the comparison period.

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Here are Petri’s comments on the staffing industry for August. :slight_smile:

According to the staffing industry’s revenue survey, the revenue of the industry’s 20 largest companies in August was approximately EUR 121 million, which represents a solid 9% decrease year-on-year. The overall market development is essentially linked to temporary staffing services, which accounted for approximately 83% of the largest players’ revenue in August. Thus, the revenue from temporary staffing services was EUR 100 million, which also represents a 9% decrease from the comparison period.

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Petri has prepared a pre-report as Eezy publishes its Q3 report on Thursday. :slight_smile:

Eezy will publish its Q3 report next Thursday around 9:00 AM. We have made cuts to our forecasts for the coming years, as market development based on statistics has fallen short of our expectations, and expectations for a market turnaround also seem to be shifting further into the future, in line with economic and employment development. The stock’s valuation for the coming years is high, which, together with the current debt situation, creates a weak return-risk ratio. Thus, we reiterate our Reduce recommendation and lower our target price to EUR 0.80 (previously EUR 0.82).

https://www.inderes.fi/research/eezy-q325-ennnakko-markkinakaanne-antaa-odottaa-itseaan

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Petri has written his comments on the HR services industry’s September performance or lack thereof. :slight_smile:

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3Q2025 results out.

Apparently, franchise changes led to a 6% decrease in chain revenue, while group revenue decreased by as much as 21%.

EBITDA and revenue at a positive but low level compared to last year.

Operating free cash flow EUR 2.0 million (1-3Q2025: EUR 3.2 million).

Covenant terms were met in 3Q2025 and are estimated to be met in 4Q2025. However, the quarterly covenant terms for 2026 (net gearing, ratio of interest-bearing net debt to adjusted EBITDA, and minimum cash reserves) are “challenging”. This means they are presumably tightening in 2026, and there are no clear signs that the business turnaround from a downward spiral would be straightening out. However, the extent of the tightening is also unknown.

July–September 2025

Chain revenue\*, which also includes the revenue of franchise entrepreneurs, was EUR 62.2 million (EUR 66.5 million in July–September 2024). Chain revenue decreased by 6%. (\*more detailed calculation formula in the interim report)
Group revenue was EUR 35.5 million (EUR 44.9 million in July–September 2025). Revenue decreased by 21%.
EBITDA was EUR 3.7 million (3.3).
Operating profit was EUR 1.2 million (1.1) and was 3.4% of revenue (2.5%).
The result included personnel expenses related to the termination of employment relationships EUR 0.4 (0.4) million and other non-recurring expenses EUR 0.6 million (0.6).
Earnings per share was EUR 0.01 (0.02) per share.
Savings measures from profit improvement programs were reflected in improved profitability.
The AI-assisted enterprise resource planning system for HR services is in use in all regions and industries; we have moved as planned from implementation to the continuous development phase.
The implementation of the new organization announced in June and the management model that places our customer’s decision-making at its core was continued.

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https://view.news.eu.nasdaq.com/view?id=bde0b5c7d0a20d94d4b706095e7c1513b\u0026lang=fi\u0026src=listed

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The analyst’s comments were already available there

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For Eezy, light is really starting to appear at the end of the tunnel as the market decreased slightly less and profitability was very good. In Q2, development seemed to be still slightly worse than the market, meaning the trend is correct. If we look at the adjusted figures, the operating profit (EBITDA) would have been €4.3 million, or as much as 13%, without one-off expenses. Although these one-off items have been continuous now, at least the costs related to personnel reductions should end next year, provided that the decline in revenue stops as the economic situation improves. In the recent months’ business cycle barometer for the staffing industry, expectations for the future have already been quite firmly in positive territory. If Eezy’s own operations now seem to be in order (profitability, maintenance of market share), then concrete improvements can already be achieved next year. Of course, they must, as the financial position is so tight.

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I listened to Eezy’s earnings webinar, and regarding the covenant levels, it was only stated that discussions would be held in good faith…

From the interim reports, I dug out the EBITDA, net debt including IFRS 16, and the net debt/EBITDA ratio. This is calculated by summing the rolling 12-month EBITDA and dividing it by the net debt including IFRS 16 at the end of the period.

If 1) the debt amount is kept / can be kept unchanged, and 2) EBITDA changes from the 3Q2025 level onwards as in the previous year, then, for example, a level of 5.0 does not require any special performance.

A level of 4.0 would require an EBITDA of 12.5 million euros with net debt including IFRS 16 of 50 million euros, and a level of 3.0 would require an EBITDA of 16.7 million euros.

So, the math is delicate when we are hovering near zero.

Of course, one could speculate that pushing the debt down to the 50.0 million euro level has required some effort with accounts receivable and accounts payable. Perhaps a better process for receivables, perhaps accounts receivable have been sold, perhaps longer payment terms have been agreed upon. Perhaps longer payment terms have been agreed upon for accounts payable, paid as late as the contract allows or with a delay, perhaps cash discount terms are not utilized, etc. Anyway, accounts receivable from a year ago -5.2 million euros, accounts payable +1.6 million euros. Mysteriously, the interim report also states that “The amount of operating free cash flow is temporarily affected by measures taken to optimize cash flow during January-September.” So, something has been done that

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Petri interviewed Eezy’s CEO Johan Westermarck. :slight_smile:

Topics:

00:00 Introduction
00:12 Third quarter development
01:05 Background factors for the decline in HR services revenue
02:29 Cost structure and efficiency measures
04:52 What’s the status regarding the enterprise resource planning system?
06:57 Indebtedness and covenant levels

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When calculating covenant levels, adjusted EBITDA is used according to the interim report. Has it even been disclosed in the reports?

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Well, indeed, it says there that adjusted EBITDA is used.

I calculated it using the EBITDA presented in the interim report, and indeed the result of the net debt/EBITDA calculation was the same as what is stated in the interim report. When EBITDA is a rolling 12 months and net debt includes IFRS at the end of the reporting period.

We probably don’t know what the adjusted EBITDA is, or what the covenant levels are now and in the future… perhaps the adjustment could then be those specifically mentioned, such as for Q3 2025:

  • The result included personnel costs related to the termination of employment relationships of EUR 0.4 (0.4) million and other non-recurring costs of EUR 0.6 (0.6) million.

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I find it somewhat strange that financing negotiations were just held in the spring, and since then, the operating margin/cash flow development has been quite good. So how is it that we’re in a situation where next year will be tight with covenants again? What level of performance was expected, then?

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@Petri_Gostowski’s latest report:

“Eezy generated a free cash flow of 0.9 MEUR in Q1-Q3’25, which reflects the criticality of strengthening cash flow to bring down indebtedness.”

This cash flow was the best for the first 3 quarters since 2022 (even then, only lower investments made it better), and Eezy’s cash flow is generally weighted towards the last quarter. With the current cost structure, it seems that the cash flow will be strong this year as well, although the cash flow optimization measures have yielded some good results in these earlier quarters, which might take a little away from the last one.

Since efficiency measures with their one-off costs have been heavily implemented quarter after quarter, and now if these are not done in Q4, then the cash flow should be stronger in this respect as well, without those costs. Next year, the investment level can be expected to drop just a little, based on what I heard from the CEO in the webcast.

It seems that Eezy would have good prospects for future quarters, but those challenges regarding financing covenants

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Free cash flow this year – if calculated as Operating cash flow - investments - lease liability repayments – has indeed been only 0.9 M€. However, that is clearly more than the -1.2 M€ of the corresponding periods in 2023 / 2024.

4Q2023 was 2.3 M€, and 4Q2024 was as much as 4.7 M€.

I interpreted that some cash flow pumping has been practiced during 2025, so I would be surprised if a setback like last year’s occurred. This is because quite many companies perform their pumping at the end of the year, perhaps Eezy also did it earlier.

On the other hand, “one-offs” have already accumulated this year to the extent of 2024, it remains to be seen whether operating cash flow needs to be burdened with them in 4Q2025… Well, perhaps, let’s see, the decline in turnover has continued and the first quarter is the year’s low point.

My own interpretation, as can be inferred from the interview, is that the covenants are tightening more than the situation is improving. Probably in the 1Q2025 covenant negotiations, the focus has been more on 2025 covenants than 2026, as well as the perception that the business environment would improve in 2H2025 or similar. This has been hoped for and expected for the entire national economy for a long time… EDIT: an addition to that, both Saksi and Westermark mention that historically, the staffing industry was among the first to rise when an upturn begins.

k€

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M€

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